In the Analysis of Financial Leverage, All of the Following

question 22

Multiple Choice

In the analysis of financial leverage, all of the following are referred to as fixed charges EXCEPT ____.

• A) bond interest
• B) common stock dividends
• C) bank interest
• D) preferred stock dividends

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Definitions:

Permanent Difference

A difference between the book income and taxable income that will not reverse over time.

Product Warranty Costs

Expenses incurred by a company to repair, replace, or reimburse for products that fail to meet specified warranties.

Municipal Bonds

Debt securities issued by states, municipalities, or counties to finance capital expenditures.

Percentage Depletion

A tax deduction method that allows an owner or operator of a mine or other natural resources to deduct a percentage of the resource's value as it is depleted.