Gentech, Inc A)013
B)1

Gentech, Inc. is an integrated circuit (microchip) manufacturer based out of New Jersey. Its principal products include microprocessors and motherboard chipsets. Selected financial statement values for Gentech are shown in the table, below. What is the degree of operating leverage for Gentech given the change in revenues from Year 1 to Year 2? $$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Gentech Inc. } \\( \$ 000 \text { s } ) \end{array} & & \\\hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Revenues } & \$ 70,000 & \$ 75,000 \\\hline \begin{array} { c } \text { Cost of Goods } \\\text { Sold }\end{array} & 45,000 & 48,500 \\\hline \text { SG\&A } & 13,000 & 13,500 \\\hline \text { Depreciation } & 3,000 & 3,200 \\\hline \text { EBIT } & 9,000 & 9,800 \\\hline\end{array}$$

A) 0.13
B) 1.17
C) 1.00
D) 1.24
E) 0.75