Question

Bendel Incorporated has an operating leverage of 5.8. If the company's sales increase by 12%, its net operating income should increase by about:_________

Answer 1

69.60 %

Step-by-step explanation:

Degree of Operating Leverage shows the times Earnings Before Interest and Tax (EBIT) will change as a result of a change in sales contribution. Increases of sales of 12% will lead to increase in EBITof 69.60 % (12% × 5.8).