-The Degree of Financial Leverage Is:
A) 1

question 35

Multiple Choice

$$\begin{array} { l r } \text { Sales } ( 100,000 \text { units) } & \$ 1,000,000 \\\text { Variable costs } & \underline { 300,000 } \\\text { Contribution margin } & 700,000 \\\text { Fixed manufacturing costs } & \underline { 250,000 } \\\text { Operating income } & 450,000 \\\text { Interest } & \underline { 60,000 } \\\text { Earnings before taxes } & 390,000 \\\text { Taxes (at } 31 \% \text { ) } & \underline { 120,900 } \\\text { Net Income } & \underline { \$ 269,100 } \\\text { Shares outstanding } & 10,000\end{array}$$
-The Degree of Financial Leverage is:

• A) 1.56x.
• B) 1.79x.
• C) 7.50x.
• D) 1.15x.

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Definitions:

Challenging

Something that demands skill, effort, or perseverance to overcome, often leading to personal growth or improvement.

Worth It

A subjective evaluation indicating that something is considered valuable or beneficial enough to justify the effort or cost involved.

Stepparent

An individual who is married to a biological parent of a child but is not the child's biological mother or father.

Previous Marriage

A marital union that has been legally dissolved through divorce or annulled, before entering into a subsequent marriage.