A Firm Has EBIT of $375,000, Interest Expense of $75,000

question 63

Multiple Choice

A firm has EBIT of $375,000, interest expense of $75,000, preferred dividends of $6,000 and a tax rate of 40 percent. The firm's degree of financial leverage at a base EBIT level of $375,000 is_________.

• A) 1.09
• B) 1.28
• C) 0.97
• D) 1.21

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Definitions:

Security Features

Measures or mechanisms implemented to ensure safety and prevent unauthorized access or damage.

Photocopy Clearly

The act of making a clear and readable copy of a document or image using a photocopying machine.

Secure Document Check Face

The process of examining the front side of a document to ensure its validity and security features are intact.

Cash Back

A feature of some financing arrangements and credit cards where a percentage of the amount spent is returned to the cardholder.