Everything Else Equal, a Firm Can Reduce Its Operating Breakeven

question 45

Multiple Choice

Everything else equal, a firm can reduce its operating breakeven point by:

• A) increasing its fixed costs.
• B) decreasing the selling price of the product that is sold.
• C) increasing the contribution margin.
• D) increasing the variable cost per unit.
• E) decreasing the earnings per share.

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Definitions:

Equity Multiplier

A ratio of financial leverage showing the portion of a company's assets financed through shareholders' equity.

Statement Of Financial Position

Financial statement showing a firm’s accounting value on a particular date. Also known as a balance sheet.

Statement Of Comprehensive Income

Financial statement summarizing a firm’s performance over a period of time. Formerly called an income statement.

Quick Ratio

A liquidity metric that measures a company's ability to cover its short-term obligations with its most liquid assets, excluding inventory.