If EBIT Equals $280,000 and Interest Equals $20,000, with a Tax

question 31

Multiple Choice

If EBIT equals $280,000 and interest equals $20,000, with a tax rate of 31%, what is the degree of financial leverage?

• A) 14.00x
• B) 9.66x
• C) 3.91x
• D) 1.08x

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Definitions:

Inward Focus

An organizational perspective that prioritizes internal processes, values, and concerns over external trends, customer needs, or market changes, which can limit growth and adaptability.

Organizational Socialization

The process by which new employees learn the values, norms, and required behaviors which permit them to participate as members of an organization.

Outsiders

Individuals or groups who are not part of a specific community or organization, often facing different social dynamics or barriers to inclusion.

Insiders

Individuals within an organization or group who have exclusive access to information, knowledge, or power not available to outsiders.