HQ Sustainable Maritime Industries, Inc. is an integrated aquatic product company (producing,
processing, and farming) in the People's Republic of China. Its principal products include tilapia and
white-legged shrimp that are exported to the United States, Canada, Japan, and Europe. Selected
financial statement values for HQ are shown in the table below. What is the degree of financial
leverage for HQ given the change in revenues from Year 1 to Year 2?
Selected Accounting Information HQ Sustainable Maritime Industries Inc. ($000s)
Year 1
Year 2
EBIT
12,954.00
14,249.40
Interest
647.70
647.70
Pre-Tax Income
12,306.30
13,601.70
Taxes
4,922.52
5,440.68
Net Income
7,383.78
8,161.02
Shares Outstanding
14,661
14,661
EPS
0.5036
0.5566
The degree of financial leverage for HQ is ______. (Round to two decimal places.)