What Would a Desired Reserve Ratio of 40 Percent Indicate

question 109

Multiple Choice

What would a desired reserve ratio of 40 percent indicate about each dollar of reserves?

• A)It could support $0.40 of demand deposits.
• B)It could support $1.60 of demand deposits.
• C)It could support $2.50 of demand deposits.
• D)It could support $4.00 of demand deposits.

Understand the concept of operating leverage and its impact on business profits in response to sales changes.

Perform a detailed financial analysis to determine sales levels needed for desired profit outcomes.

Apply break-even analysis to multi-product scenarios, including calculating sales mix and contribution margins.

Calculate and interpret operating income changes based on projected sales increases and operating leverage.

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