Based Upon the Preceding Description of Western Bank's Situation, Which

question 90

Multiple Choice

Based upon the preceding description of Western Bank's situation, which aspect of the current situation is inconsistent with Western Bank's decision to maintain a centralized form of decision making?

• A) Lower-level managers want a voice in decisions.
• B) Lower-level managers are not as experienced at making decisions as upper-level managers.
• C) The company is large.
• D) The organization is facing a crisis.

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Definitions:

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by stockholder's equity.

Degree Of Total Leverage

A measure that quantifies the sensitivity of a company's earnings before interest and taxes to a change in its sales.

Financial Leverage

The use of borrowed capital or debt to increase the potential return of an investment.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, indicating the extent to which a company can increase its profits by increasing sales.