Beachcomber Treasures has determined that its degree of operating leverage (DOL) is 3.5 and its degree of financial leverage (DFL) is 2.0. (a) What is Beachcomber’s degree of total leverage (DTL)? (b) What impact will a 5 percent decrease in sales have on Beachcomber’s (i) EBIT and (ii) net income?
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