Which of the Following Is a Key Benefit of Using

question 47

Multiple Choice

Which of the following is a key benefit of using the degree of leverage concept in financial analysis?

• A) It shows how a given change in leverage will affect sales.
• B) It identifies, with certainty, the future net income based upon sales projections about the future.
• C) It establishes the optimal capital structure for the firm.
• D) It allows decision makers a relatively clear assessment of the consequences of alternative actions.
• E) None of the above statements is correct.

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Definitions:

Shift of Supply

A change in the quantity of a good that suppliers are willing and able to sell in the market at any given price, often due to changes in production costs or technology.

Heating Oil

A low viscosity, liquid petroleum product used as a fuel oil for furnaces or boilers in buildings. It is a major component in home heating solutions in colder regions.

Quantity Supplied

The amount of a commodity that producers are willing to sell at a particular price over a given period of time.

Supply

The total amount of a product or service that is available to consumers at a given price level.