HQ Sustainable Maritime Industries, Inc. is an integrated aquatic product compan

Question

HQ Sustainable Maritime Industries, Inc. is an integrated aquatic product company (producing, processing, and farming) in the People's Republic of China. Its principal products include tilapia and white-legged shrimp that are exported to the United States, Canada, Japan, and Europe. Selected financial statement values for HQ are shown in the table below. What is the degree of financial leverage for HQ given the change in revenues from Year 1 to Year 2? The degree of financial leverage for HQ is .

Explanation / Answer

yr 1 yr 2 % change EPS 0.37474509 0.426465916 13.80% EBIT 11018.92 12451.38 13.00% DFL = % change in EPS/% change in EBIT ie= 13.8%/13% ie= 106.17

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