The Use of Leverage by a Firm

question 40

Multiple Choice

The use of leverage by a firm

• A)increases the variability of EBIT.
• B)replaces all use of homemade leverage.
• C)increases shareholder risk.
• D)affects EBIT more than net income.
• E)increases EPS at low levels of income.

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Definitions:

Brand Integrity

The consistency of the brand values, message, and experience delivered across all platforms and touchpoints, building trust and loyalty among consumers.

Franchising

A business model in which a company (the franchisor) allows an individual (the franchisee) to operate a location of their brand, sharing methods, trademarks, and support in exchange for fees and adherence to brand standards.

Business Ownership

This pertains to the legal possession and responsibility of a business entity.

Large Company

A corporation or enterprise that operates on a large scale in terms of revenue, employees, or market presence.