If Debt Financing Is Used, Which of the Following Is

question 11

Multiple Choice

If debt financing is used, which of the following is true?

• A) The percentage change in net operating income is greater than a given percentage change in net income.
• B) The percentage change in net operating income is equal to a given percentage change in net income.
• C) The percentage change in net income relative to the percentage change in net operating income depends on the interest rate charged on debt.
• D) The percentage change in net operating income is less than the percentage change in net income.
• E) The degree of operating leverage is greater than 1.

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Definitions:

Vroom-Jago Leader-Participation Model

is a decision-making framework that helps leaders determine how much involvement their teams should have in the decision-making process, depending on the situation.

Decision Acceptance

The process by which individuals come to terms with and support a decision made by others, typically within an organizational context.

Decision Quality

The effectiveness of a decision based on its outcomes, taking into account the thoroughness of the decision-making process, including the gathering and evaluation of information.

Emotional Intelligence

The skill of recognizing, utilizing, and controlling one's own feelings in constructive manners to reduce stress, interact efficiently, connect with empathy towards others, tackle obstacles, and resolve disputes.