If Debt Financing Is Used, Which of the Following Is

question 24

Multiple Choice

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

• A) The percentage change in net operating income will be greater than a given percentage change in net income.
• B) The percentage change in net operating income will be equal to a
• Given percentage change in net income.
• C) The percentage change in net income relative to the percentage change in net operating income will depend on the interest rate
• Charged on debt.
• D) The percentage change in net income will be greater than the
• Percentage change in net operating income.
• E) 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.

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Definitions:

Depressant

A category of psychoactive drugs that reduce arousal and stimulation, affecting the central nervous system to slow down bodily functions.

Nervous System

A complex network of nerves and cells that transmit signals between different parts of the body, coordinating its actions and sensory information.

Activity Decrease

A reduction in the level of physical or mental action or the frequency of activities.

Social Control

Mechanisms, strategies, and institutions society uses to regulate individual behavior and maintain social order.