Since Defaults Can Be Costly,it Is Cost-Effective to Undertake a Full

question 1

True/False

Since defaults can be costly,it is cost-effective to undertake a full credit analysis of all customers.

---

Definitions:

Contribution Margin Ratio

The contribution margin ratio is the percentage of each sales dollar remaining after deducting variable expenses, indicating how much of each dollar contributes to fixed expenses and profit.

Operating Leverage

An indicator of the way in which growth in revenue results in an increase in operating profit, revealing the ratio of fixed to variable expenses within a business.

Net Operating Income

The total profit of a company after operating expenses are deducted, but before taxes and interest payments.

Sales Increase

It refers to the upward change in the number of products sold or the value of sales over a specific period.