At a base sales level of $400,000, a firm has a degree of operating leverage of 2 and a degree offinancial leverage of 1.5. The firm's degree of total leverage is ____________.
A) 1.3
B) 0.5
C) 3.0
D) 3.5

Question

Quizplus · Accepted Answer

Degree of total leverage = Degree of operating leverage x Degree of financial leverage
Degree of total leverage = 2 x 1.5
Degree of total leverage = 3.0

At a Base Sales Level of $400,000, a Firm Has