McDonald Company shows the following condensed income statement information for the current year:
Revenue from sales $ 3,500,000
Cost of products sold (1,700,000)
Gross profit 1,800,000
Operating expenses:
Selling expenses $425,000
General expenses 350,000 (775,000)
Operating income 1,025,000
Other income 20,000
Interest (70,000)
Operating income before income taxes 975,000
Taxes related to operations (335,000)
Income from operations 640,000
Extraordinary loss (less applicable income
taxes of $40,000) (80,000)
Income before minority interest 560,000
Minority share of earnings (50,000)
Net income $ 510,000
Required: Calculate the degree of financial leverage.