Which of the Following Statements Is CORRECT? as a Firm

question 50

Multiple Choice

Which of the following statements is CORRECT? As a firm increases the operating leverage used to produce a given quantity of output, this will

• A)normally lead to an increase in its fixed assets turnover ratio.
• B)normally lead to a decrease in its business risk.
• C)normally lead to a decrease in the standard deviation of its expected EBIT.
• D)normally lead to a decrease in the variability of its expected EPS.
• E)normally lead to a reduction in its fixed assets turnover ratio.

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Definitions:

Technological Improvements

Refers to the advancements and enhancements made in technology that lead to better efficiency, productivity, and capabilities in various fields.

Cotton Industry

The sector of the economy concerned with the production, processing, and distribution of cotton, a key material in the textile industry.

Eli Whitney

An American inventor best known for inventing the cotton gin in 1793, a device that revolutionized the cotton industry by greatly increasing the efficiency of cotton harvesting.

Federal Funding

Financial support provided by the federal government, often allocated to state and local government entities, organizations, or individuals for specific projects or purposes.