Which of the Following Statements Is CORRECT

question 56

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm lowered its fixed costs while increasing its variable costs,holding total costs at the present level of sales constant,this would decrease its operating leverage.
• B) The debt ratio that maximizes EPS generally exceeds the debt ratio that maximizes share price.
• C) If a company were to issue debt and use the money to repurchase common stock,this action would have no impact on its basic earning power ratio.(Assume that the repurchase has no impact on the company's operating income. )
• D) If changes in the bankruptcy code made bankruptcy less costly to corporations,this would likely reduce the average corporation's debt ratio.
• E) Increasing financial leverage is one way to increase a firm's basic earning power (BEP).

---

Definitions:

Vitamin D

A fat-soluble vitamin essential for calcium absorption, bone health, and immune function, produced by the body when the skin is exposed to sunlight.

Renal Pelvis

Funnel-shaped expansion of the upper end of the ureter that receives the calyces.

Renal Corpuscle

Glomerulus and Bowman’s capsule that encloses it.

Glomerulus

Mass of capillary loops at the beginning of each nephron, nearly surrounded by Bowman’s capsule.