A Technique That Analyzes the Relationship Between Total Revenue and Total

question 132

Multiple Choice

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output is referred to as

• A) break-even analysis.
• B) marginal analysis.
• C) sensitivity analysis.
• D) market analysis.
• E) tipping point analysis.

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Definitions:

Plowback Ratio

The proportion of earnings retained by a business, rather than paid out as dividends, to reinvest in its core activities.

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis.

FCFF

Free Cash Flow to the Firm; a measure of financial performance that shows how much cash is generated by a company after accounting for capital expenditures and operating expenses.

EBIT

Stands for Earnings Before Interest and Taxes, a measure of a firm's profit that includes all incomes and expenses except interest and income tax expenses.