For a Firm with a DOL of 3

question 12

Multiple Choice

For a firm with a DOL of 3.5,an increase in sales of 6% will:

• A) increase pretax profits by 3.5%.
• B) decrease pretax profits by 3.5%.
• C) increase pretax profits by 21.0%.
• D) increase pretax profits by 1.71%.

Grasp the implications of capacity decisions on the profitability and operational efficiency of organizations.

Understand the principles of net present value and its application in evaluating investment decisions.

Grasp the concept of break-even analysis and its limitations.

Understand strategies for managing and improving throughput, including dealing with bottlenecks.

---

Definitions:

Capital Commitments

The funds that a company plans to spend on long-term assets or projects over a period of time.

Ownership

The state or fact of possessing something, which can include both tangible assets (like property) and intangible assets (like intellectual property).

International Business

A business that conducts for-profit transactions of goods and services across national boundaries.

For-Profit Transactions

Financial activities conducted by businesses with the primary objective of earning profit, as opposed to non-profit or charitable activities.