Which of the Following Is True About the Concept of Leverage

question 57

Multiple Choice

Which of the following is true about the concept of leverage?

• A) At the break-even point, operating leverage is equal to zero.
• B) Combined leverage measures the impact of operating and financial leverage on EBIT.
• C) Financial leverage measures the impact of fixed costs on earnings.
• D) None of the options are true.

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Definitions:

Buy One, Get One Free

A promotional sales tactic where customers receive an additional item at no extra cost upon purchasing one.

Sales Promotion

A marketing strategy involving the short-term use of incentives or discounts to encourage the purchase of a product or service.

Rebate

A consumer discount in which a portion of the purchase price is returned to the buyer in cash; the manufacturer, not the retailer, issues the refund.

Samples

Small portions or quantities of a product distributed free or at a minimal cost to serve as a representation of the whole, allowing potential customers to test before making a purchase.