All Else Equal, If You Decrease Your Level of fiXed

question 87

True/False

All else equal, if you decrease your level of fixed costs, accounting break-even will also fall.

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Definitions:

Fixed Asset

Long-term tangible assets that a company uses in its operations to generate income, such as buildings, machinery, and equipment.

Long-Term Debt

Borrowings of a company not due for payment within the upcoming 12-month period, often used for major investments or acquisitions.

Total Capitalization

The sum of a company's long-term debt, equity, and retained earnings, reflecting the total funding sourced from investors and creditors.

Debt-Equity Ratio

A financial ratio used to understand a company's leverage, by dividing its complete liabilities by the equity available to shareholders.