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A. Operating leverage (15 marks) (i) Given the fixed overheads are reported as $106,730,000 for the year 2015 and using the data in Exhibit 1, calculate the pre-tax cash flow operating leverage for 2015. (5 marks) (ii) In what circumstance, will it be preferable to have low pre-tax cash flow operating leverage? (10 marks) B. Capital structure: financing capital expenditure and working capital (20 marks) (i) Exhibit 4 shows the capital expenditure by the company and Exhibit 5 shows the extent of ...
