Question

Sperberg Corporation's operating leverage is 5.2. If the company's sales increase by 10%, its net operating income should increase by about:

Answer 1

net operating income that is increase by 52%

Step-by-step explanation:

given data

operating leverage = 5.2

sales increase = 10%

solution

we get here net operating income that is increase by as

percentage of increase net operating income = operating leverage × sales increase .............................1

put here value we get

percentage of increase net operating income = 5.2 × 10%

percentage of increase net operating income = 52%