Which of the Following Statements Is Most Correct

question 85

Multiple Choice

Which of the following statements is most correct?

• A)The degree of combined leverage measures the sensitivity of earnings per share ininto changes in EBIT.
• B)A firm's business risk is measured by its variability in earnings per share over time.
• C)A firm's degree of combined leverage is the product of its degree of operating leverage and its degree of financial leverage.
• D)All the above statements are false.

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Definitions:

Factor

An element or component that contributes to a particular result or situation.

Bad Debts

Accounts receivable that are considered to be uncollectible, representing losses to the company.

Promissory Note

A monetary tool that includes a formal pledge from one entity to another to pay a certain amount of money, either when asked or on a predetermined date in the future.

Maturity Date

The date on which the principal amount of a loan, bond, or other financial instrument becomes due and payable.