At a Base Sales Level of $400,000, a Firm Has

question 15

Multiple Choice

At a base sales level of $400,000, a firm has a degree of operating leverage of 2 and a degree offinancial leverage of 1.5. The firm's degree of total leverage is ____________.

• A) 1.3
• B) 0.5
• C) 3.0
• D) 3.5

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Definitions:

Assets

Resources owned or controlled by a business or individual that are expected to produce economic value or benefit in the future.

Return on Assets

A measure of how effectively a company is using its assets to generate earnings.

Revenues

Revenues are the total amount of money received by a company for goods sold or services provided during a specific period.

Expenses

Costs incurred in the process of earning revenue, often categorized into operating and non-operating expenses.