What is the degree of combined leverage?

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La Cucaracha Pest Control, Inc. is reviewing its financial condition. The firm's operating leverage is 1.83. The firm’s financial leverage was of 2.37. What is the firm’s degree of combined (total) leverage of La Cucaracha Pest Control, Inc. ?

Oct 3rd, 2015

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La Cucaracha Pest Control, Inc. is reviewing its financial condition. The firm's operating leverage is 1.83. The firm’s financial leverage was of 2.37. What is the firm’s degree of combined (total) leverage of La Cucaracha Pest Control, Inc. ?

Answer

Total combine leverage = financial leverage x operating leverage
Total combine leverage = 2.37  x 1.83
Total combine leverage =  4.34 (round to two decimal place ) or 4.3371

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Oct 3rd, 2015

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