Financial Leverage Refers To

question 134

Multiple Choice

Financial leverage refers to:

• A) the use of borrowed funds for investment purposes.
• B) the mathematical law of large numbers.
• C) financial averages.
• D) buying and selling short.
• E) limiting financial liability.

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Definitions:

Raw Material Needs

The quantity of raw materials required to meet production schedules and maintain inventory levels.

Net Operating Income

A company's income after subtracting operating expenses but before deducting taxes and interest charges.

Variable Selling Expense

Costs that vary directly with the level of sales, such as commissions for sales personnel, shipping charges, and promotional expenses.

Manufacturing Overhead

All indirect costs associated with the production process, including but not limited to utilities, rent, and salaries of non-direct labor.