Ethical Companies

question 31

Multiple Choice

Ethical companies:

• A)tend to earn higher returns than companies that engage in wrong-doing.
• B)tend to have more creative employees than companies that engage in wrong-doing.
• C)are guaranteed to be more profitable in the long run than companies that engage in wrong-doing.
• D)All of these.
• E)Both (a)and (b).

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Definitions:

Break-Even Point

The production level or sales volume at which total revenues equal total expenses, resulting in no profit or loss.

Variable Costs

Costs that are directly correlated with the volume of production or sales.

Fixed Costs

Expenses that do not vary with the level of production or sales volumes, such as rent, salaries, and insurance premiums.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.