Leverage Ratios Are Generally Considered to Be More Important During

question 68

True/False

Leverage ratios are generally considered to be more important during a venture's survival and rapid-growth stages compared to the development and startup stages.

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Definitions:

Variable Cost Concept

A concept used in applying the cost-plus approach to product pricing in which only the variable costs are included in the cost amount to which the markup is added.

Fixed Manufacturing Costs

Expenses related to the production process that do not vary with the volume of production, such as salaries of supervisors and rent of the factory.

Markup

The amount added to the cost of goods to cover expenses and generate profit.

Estimated Costs

The anticipated expenses associated with a project or production, calculated before actual expenses are known.