Which of the Following Statements About Combined (Operating & Financial)leverage

question 56

Multiple Choice

Which of the following statements about combined (operating & financial) leverage is true?

• A) If a firm employs both operating and financial leverage, any percent change in sales will produce a larger percent change in earnings per share.
• B) A firm that is in a capital-intensive industry should use a higher level of financial leverage than a firm that employs low levels of operating leverage.
• C) Usage of both operating and financial leverage reduces a firm's risk.
• D) High operating leverage and high financial leverage offset one another, meaning that if sales increase by 10%, then EPS will also increase by 10%.

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Definitions:

Logistics

The management of the flow of goods, services, and information between the point of origin and the point of consumption to meet customer or corporation requirements.

Manufacturing Execution System (MES)

A control system for managing and monitoring work-in-process on a factory floor, optimizing the manufacturing process and ensuring real-time production tracking.

KPIs

Key Performance Indicators, which are quantifiable measures used to evaluate the success of an organization, employee, etc., in meeting objectives for performance.

Dashboards

Visual display panels that provide real-time information about a system or process, often used in business to monitor performance.