Which of the Following Best Explains Why the Service Sector

question 2

Multiple Choice

Which of the following best explains why the service sector is a natural avenue for e-commerce?

• A) The service sector is less geographically reliant and more globally oriented.
• B) The service sector has historically been more technology-reliant.
• C) Much of the value in services is based on the collection, storage, and exchange of information.
• D) It is not; services are difficult to translate to e-commerce because they rely on face-to-face communication and barter.

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Definitions:

Degree Of Total Leverage

A measure that quantifies the sensitivity of a company's earnings before interest and taxes to a change in its sales.

Financial Leverage

The use of borrowed capital or debt to increase the potential return of an investment.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, indicating the extent to which a company can increase its profits by increasing sales.

Modigliani-Miller Model

A foundational financial theory proposing that the market value of a company is determined by its earning power and risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends.