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19) Under which of the following conditions could the overuse

Resolved Question:

19) Under which of the following conditions could the overuse of financial leverage be detrimental to the firm?
A. Upswing of business cycle.
B. Cyclical demand for the firm's products.
C. Low interest cost compared to return on assets
D. Stable industry

20) Firms with a high degree of operating leverage are
A. significantly affected by changes in interest rates.
B. usually trading off lower levels of risk for higher profits.
C. trading off higher fixed costs for lower per-unit variable costs.
D. easily capable of surviving large changes in sales volume

21) The degree of operating leverage is computed as
A. percent change in EPS divided by percent change in operating income.
B. percent change in volume divided by percent change in operating profit.
C. percent change in operating income divided by percent change in volume.
D. percent change in operating profit divided by percent change in net income.
Submitted: 7 years ago.
Category: Homework
Expert:  Neo replied 7 years ago.

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