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:

Repatriate

The process of returning a person to their country of origin or citizenship after they have been abroad.

Home Country

The county in which a corporation's headquarters is located, influencing its management practices and approach to international business.

Foreign Country

A nation different from one's own, especially in terms of home or operational base.

Strategic Control

A process used by organizations to monitor and regulate their strategies in order to achieve their long-term goals.