Given the following information for Computech, compute the firm's degree of combined leverage (dollars are in thousands except EPS). Round your answer to one decimal place.

Year 1Year 2

Sales$700,000$784,000

Fixed costs120,000120,000

Variable costs200,000224,000

Earnings before interest and taxes$380,000$440,000

Interest40,00040,000

Earnings per share (EPS)$5.10$6.00

Degree of combined leverage: 

Degree of Combined leverage usually abbreviated as DCL is leverage ratio used in finance that sums up the combined effects degree of operating leverage and the degree of financial leverage has has on the earnings per share given a particular change or changes in sales of a company. This ratio is very useful to a company as its helpful in understanding the effects of combined financial and operational leverages on the company. when the level of DCL is high it indicates a risk involved in the company and it may imply that the fixed costs are significantly high. If the leverage is low, it means well for the business.

degree of combined leverage is summarized by formula;

DCL= %change in earnings per share(EPS)/%change in sales

This can also be calculated by; degree of financial leverage*degree of operational leverage