Calculating Degree of Financial Leverage

ABC Corporation reports the following financial information for the current year:

- Total Assets: $10,000,000

- Total Liabilities: $6,000,000

- Net Income: $1,200,000

- Preferred Dividends: $200,000

Using this information, determine the degree of financial leverage (DFL) when examining a 10% increase in sales. Financial leverage measures the sensitivity of net income to changes in sales due to the presence of fixed financial costs.