Which of the Following Statements Is CORRECT? as a Firm

question 11

Multiple Choice

Which of the following statements is CORRECT? As a firm increases the operating leverage used to produce a given quantity of output, this will

• A) normally lead to an increase in its fixed assets turnover ratio.
• B) normally lead to a decrease in its business risk.
• C) normally lead to a decrease in the standard deviation of its
• Expected EBIT.
• D) normally lead to a decrease in the variability of its expected EPS.
• E) normally lead to a reduction in its fixed assets turnover ratio.

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Definitions:

Organic Structure

An organizational design that is flexible and decentralized, with low levels of formalization, encouraging collaboration and adaptability to change.

Integrative Mechanism

A system or process designed to ensure coordination and collaboration among different parts or functions within an organization, enhancing overall efficiency and effectiveness.

Structural Configurations

Refers to the arrangement and organization of elements within a system, often used in the context of organizational theory to describe the structure of a company or institution.

Environmental Uncertainty

The degree of unpredictability and complexity in an organization’s external environment.