Flingers Inc.reveals the following information in their annual report for FY 2014.
They plan to aggressively pursue cost savings in the purchasing area for FY 2015 and expect to lower their cost of goods sold by 8% while maintaining the same level of sales.Calculate Flingers' leverage effect for 2014 and their expected leverage effect for 2015.Compare the two results for your leverage effect calculations and provide insight as their relative magnitude.

Question

Flingers Inc.reveals the following information in their annual report for FY 2014.
  They plan to aggressively pursue cost savings in the purchasing area for FY 2015 and expect to lower their cost of goods sold by 8% while maintaining the same level of sales.Calculate Flingers' leverage effect for 2014 and their expected leverage effect for 2015.Compare the two results for your leverage effect calculations and provide insight as their relative magnitude.

Quizplus · Accepted Answer

The Answer of Flingers Inc.reveals the following information in their annual report for FY 2014.
  They plan to aggressively pursue cost savings in the purchasing area for FY 2015 and expect to lower their cost of goods sold by 8% while maintaining the same level of sales.Calculate Flingers' leverage effect for 2014 and their expected leverage effect for 2015.Compare the two results for your leverage effect calculations and provide insight as their relative magnitude.