-The Degree of Combined Leverage Is:
A) 2

question 41

Multiple Choice

$$\begin{array} { l r } \text { Sales } ( 100,000 \text { units) } & \$ 1,000,000 \\\text { Variable costs } & \underline { 300,000 } \\\text { Contribution margin } & 700,000 \\\text { Fixed manufacturing costs } & \underline { 250,000 } \\\text { Operating income } & 450,000 \\\text { Interest } & \underline { 60,000 } \\\text { Earnings before taxes } & 390,000 \\\text { Taxes (at } 31 \% \text { ) } & \underline { 120,900 } \\\text { Net Income } & \underline { \$ 269,100 } \\\text { Shares outstanding } & 10,000\end{array}$$
-The Degree of Combined Leverage is:

• A) 2.79x.
• B) 1.90x.
• C) 1.79x.
• D) 3.46x.

Know the conditions and benefits of forming different legal entities, such as S corporations, and the impacts of taxation.

Grasp the concept of duty towards shareholders and the implications of breaching these duties.

Understand the principles behind the issuance of stock below fair market value and the legal remedies available.

Comprehend the legal defenses available to directors and officers against shareholder action.

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Definitions:

Capital Requirements

The minimum amount of capital a bank or financial institution must hold as required by its financial regulator.

Price Per Share

Price Per Share is the amount of money that each share of a company's stock is worth on the stock market at any given time.

Notes Payable

A written agreement where one party promises to pay another party a specific sum of money on a certain date or on demand.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, typically with fixed dividends.