Which of the Following Events Is Likely to Encourage a Company

question 18

Multiple Choice

Which of the following events is likely to encourage a company to raise its target debt ratio?

• A) An increase in the corporate tax rate.
• B) An increase in the personal tax rate.
• C) An increase in the company's operating leverage.
• D) Statements a and c are correct.
• E) All of the statements above are correct.

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Definitions:

Cost Classifications

This refers to the categorization of costs based on their nature, behavior, or decision-making needs, such as fixed vs. variable costs, direct vs. indirect costs, or product vs. period costs.

Sales Commission

A form of payment to a salesperson for selling a product or service, typically a percentage of the sale amount.

Product Cost

The total cost incurred to create a product, encompassing direct materials, direct labor, and overhead costs.

Straight-Line Depreciation

A method of calculating the depreciation of an asset where the cost is evenly spread over its useful life.