Which of the Following Is Inconsistent with a Firm That

question 10

Multiple Choice

Which of the following is inconsistent with a firm that sells for very near book value?

• A) Low current earning power
• B) No intangible assets
• C) High future earning power
• D) Low, unstable dividend payment

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's earnings before interest and taxes (EBIT) to a percentage change in sales, indicating the impact of fixed costs on profits.

High-low Method

The high-low method is an accounting technique used to estimate the variable and fixed costs of a business based on the highest and lowest levels of activity.

Unit Sales Price

The price at which an individual unit of a product is sold, important for determining profitability and setting pricing strategies.