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CFA Level 1
Corporate Finance

Calculating Total Leverage for ABC Corporation

Medium Measures Of Leverage Total Leverage

ABC Corporation is evaluating its financial structure to better understand its leverage position. In the past fiscal year, the firm reported a contribution margin of $500,000, fixed costs of $200,000, and operating income of $300,000. The company is examining its total leverage, which is defined as the effect of both operating and financial leverage on net income. Using this information, calculate the total leverage of ABC Corporation.

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