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:

Pure Monopoly

A market structure characterized by a single seller selling a unique product in the market. In a pure monopoly, the single seller controls the entire market supply and sets prices.

Allocative Inefficiency

A situation where resources are not allocated in a way that maximizes the welfare or utility of consumers, often leading to a loss of economic efficiency.

Regulation Prices

Regulation prices involve government-imposed limits on the prices that can be charged for goods and services in certain markets to protect consumer interests.

Unregulated Monopolist

A monopolist that operates without governmental restrictions or regulations, freely setting prices and output levels without external interference.