If EBIT Equals $200,000 and Interest Equals $40,000, What Is

question 31

Multiple Choice

If EBIT equals $200,000 and interest equals $40,000, what is the degree of financial leverage?

• A) 5.33x
• B) 1.25x
• C) .8125x
• D) 4.33x

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Definitions:

Nonprofit Distributing

Organizations that do not distribute their surplus funds to owners or shareholders but instead use them to support their missions and activities.

Closed Competition

A competitive scenario where participation is restricted to specific entities or individuals who meet predetermined criteria.

Noncompulsory Distributions

Financial or resource allocations made by an organization or government that are not mandated by law or regulation, often discretionary in nature.

Demand Heterogeneity

Describes the variation in consumers' preferences and needs, which can influence the market strategy of businesses.