If Debt Financing Is Used, Which of the Following Is

question 97

Multiple Choice

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

• A) The percentage change in net operating income will be equal to a given percentage change in net income.
• B) The percentage change in net income relative to the percentage change in net operating income will depend on the interest rate charged on debt.
• C) The percentage change in net income will be greater than the percentage change in net operating income.
• D) The percentage change in sales will be greater than the percentage change in EBIT, which in turn will be greater than the percentage change in net income.
• E) The percentage change in net operating income will be greater than a given percentage change in net income.

---

Definitions:

Carboxylic Acid

Organic compounds containing a carboxyl group (-COOH), characterized by their acidic properties and widespread occurrence in nature.

13C NMR Spectrum

A representation of the nuclear magnetic resonance of carbon-13 atoms within a molecule, revealing the distinct chemical environments of carbon atoms.

Carbonyl Carbon

The carbonyl carbon is the carbon atom of a carbonyl group (C=O), doubly bonded to an oxygen atom and bonded to two other atoms or groups, which can vary depending on the specific carbonyl compound (e.g., aldehydes, ketones).

Cyclohexylacetic Acid

An organic compound featuring a cyclohexane ring attached to an acetic acid group, used in the synthesis of various pharmaceuticals and chemical products.