Which of the Following Is Not True About Leverage

question 1

Multiple Choice

Which of the following is not true about leverage?

• A) Operating leverage influences the top half of the income statement,determining EBIT.
• B) Financial leverage deals with the bottom half of the income statement,determining EPS.
• C) Combined leverage utilizes the entire income statement,showing the impact of change in volume on EBIT.
• D) Combined leverage utilizes the percentage change in EPS and percentage change in sales.

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Definitions:

Labor Productivity

A measure of economic performance that compares the amount of goods and services produced with the number of hours worked.

Labor Demand Curve

A graphical representation showing the relationship between the quantity of labor demanded by firms and the wage rate.

Labor Productivity

A measure of economic performance that indicates the amount of goods and services produced per unit of labor input.

Labor Supply Curve

A graphical representation showing the relationship between the quantity of labor supplied and the wage rate, typically illustrating that higher wages attract a larger labor supply.