If a Firm's Degree of Total Leverage (DTL)is 8

question 64

Multiple Choice

If a firm's degree of total leverage (DTL) is 8.0,which of the following must be correct?

• A) The firm must have fixed operating costs.
• B) The firm must have fixed financial costs.
• C) The firm must have both fixed operating costs and fixed financial costs.
• D) The firm must have some fixed costs,but not enough information is given to determine whether the fixed costs are operating,financial,or both.
• E) With the information given,we cannot tell whether the firm has any fixed costs (either operating or financial)at all.

Grasp the concept of factoring as a cash management technique.

Comprehend the implications of changes in credit terms on the accounts payable period and cash cycle.

Recognize the various uses of cash in a company.

Understand how to manage cash flow problems in the short term.

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Definitions:

Equilibrium Price

The price point where market supply matches market demand, leading to a balanced market condition.

Pens

Writing instruments that use ink to leave a mark on surfaces, typically used for handwriting.

Pencils

Simple writing instruments consisting of a graphite core encased in a wooden or plastic barrel used for writing or drawing.

CPM/PERT

A project management tool that combines the critical path method and the program evaluation and review technique.