The base level of EBIT must be held constant to compare the financial leverage associated with different levels of fixed financial costs. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Financial leverage results from the presence of variable financial costs in a firm’s income stream. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A ________ is a short-term, unsecured promissory note issued by firms with a high credit standing. These notes are primarily issued by commercial finance companies. A) line of credit B) commercial paper C) revolving line of credit D) T-bill ANSWER B
Date: September 19th, 2020
The focus of the analysis of human resource management and strategy is on: A) the skills and knowledge level of the firm’s employees. B) the capabilities and character of the management team. C) the capabilities and potential of the firm’s employees. D) All of the above. ANSWER B
Date: September 19th, 2020
Demand risk refers to the probability that actual supply for the products or services will exceed anticipated supply. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Financial leverage may be defined as the potential use of variable financial costs to magnify the effects of changes in earnings before interest and taxes (EBIT) on a firm’s earnings per share (EPS). Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The effect of financial leverage is such that an increase in a firm’s earnings before interest and taxes (EBIT) results in a more than proportional increase in the firm’s earnings per share (EPS), while a decrease in the firm’s EBIT results in a less than proportional decrease in EPS. Indicate whether the statement is true […]
Date: September 19th, 2020
________ occurs when a firm buys back some of its own common shares. A) A leveraged buyout B) An IPO C) A share repurchase D) Secondary offering ANSWER C
Date: September 19th, 2020
A public equity offering A) makes the securities being issued available to “retail” investors. B) makes the securities being issued available to large institutional investors. C) is usually more expensive than a private placement. D) All of the above are true. ANSWER D
Date: September 19th, 2020
Whenever the percentage change in EBIT resulting from a given percentage change in sales is greater than the percentage change in sales, operating leverage exists. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
