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From the following income statement for 1999, calculate the degree of operating leverage. (3 marks) Income

Sales $ 440,000
Cost of goods sold 240,000
Gross profit $ 200,000
Fixed costs 96,000
EBIT $ 104,000
Interest 19,200
EBT $ 84,800
Taxes @ 35% 29,680
Net income $ 55,120
Shares outstanding 16,000
EPS $ 5.52 SOLUTION