Which of the Following Statements About Combined (Operating & Financial)leverage

question 56

Multiple Choice

Which of the following statements about combined (operating & financial) leverage is true?

• A) If a firm employs both operating and financial leverage, any percent change in sales will produce a larger percent change in earnings per share.
• B) A firm that is in a capital-intensive industry should use a higher level of financial leverage than a firm that employs low levels of operating leverage.
• C) Usage of both operating and financial leverage reduces a firm's risk.
• D) High operating leverage and high financial leverage offset one another, meaning that if sales increase by 10%, then EPS will also increase by 10%.

Evaluate the benefits of using a direct versus indirect format for bad news messages.

Incorporate strategies for softening the impact of bad news while maintaining clarity.

Understand the structure and components of both direct and indirect bad news messages.

Distinguish between effective and ineffective elements of an opening buffer in negative news messages.

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Definitions:

Employment Contract

A legal agreement between an employer and an employee that outlines the terms of employment, including duties, duration, and compensation.

Binding

A term referencing agreements or legal decisions that are enforceable and must be adhered to by the parties involved.

Fiduciary Duty

The legal obligation of one party to act in the best interest of another when entrusted with care of money or property.

Utmost Good Faith

A legal doctrine requiring all parties to a contract, especially in insurance, to act honestly and disclose all relevant facts.