Multiple choice
Thehonest1) Financial leverage deals with:
A.-the relationship of debt and equity in the capital structure.
B.-the entire income statement.
C.-the relationship of fixed and variable costs.
D.-the entire balance sheet.
2) When a firm employs no debt
A.-it has a financial leverage of zero.
B.-its operating leverage is equal to its financial leverage.
C.-it has a financial leverage of one.
D.-it will not be profitable.
3) A firm's break-even point will rise if
A.-contribution margins increase
B.-price per unit rises
C.-fixed costs decrease
D.-variable cost per unit rises
4) If a firm has a price of $4.00, variable cost per unit of $2.50 and a breakeven point of 20,000 units, fixed costs are equal to:
A.-$10,000
B.-$30,000
C.-$13,333
D.-$50,000
- 10 years ago
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