Which of the Following Is/are Helpful for Evaluating the Effect

question 16

Multiple Choice

Which of the following is/are helpful for evaluating the effect of leverage on a company's risk and potential returns?
I.Estimated pro forma coverage ratios
II.The recognition that financing decisions do not affect firm or shareholder value
III.A range of earnings chart and proximity of expected EBIT to the breakeven value
IV.A conservative debt policy that obviates the need to evaluate risk

• A) I only
• B) III only
• C) I and III only
• D) II and III only
• E) IV only
• F) None of the above.

---

Definitions:

Casual Furniture Company

A business that specializes in creating and selling furniture designed for informal settings, typically emphasizing comfort and style.

Conversion Costs

The combined costs of direct labor and manufacturing overhead that are incurred to convert raw materials into finished goods.

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and factory overhead.

Direct Materials

Resources that are directly linked to the creation of particular products or services.