Some Factors That Determine Business Risk Include Sales Variability and Debt

question 80

True/False

Some factors that determine business risk include sales variability and debt to equity ratio.

Understand the concept and applications of permutations in optimization problems.

Understand how to calculate and interpret the gross margin ratio.

Identify and understand the components and significance of ending inventory.

Calculate and understand the implications of the current ratio and acid-test ratio for business liquidity.

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Definitions:

Diluted Earnings Per Share

A metric that calculates a company's earnings per share (EPS) if all convertible securities were converted into common stock, potentially lowering the EPS.

Convertible Debt

A type of bond or loan that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often paying fixed dividends.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, including loans, bonds, or credit lines.