If Debt Financing Is Used, Which of the Following Is

question 25

Multiple Choice

If debt financing is used, which of the following is CORRECT?

• A) the percentage change in net operating income will be equal to a given percentage change in net income.
• B) the percentage change in net income relative to the percentage change in net operating income will depend on the interest rate charged on debt.
• C) the percentage change in net income will be greater than the percentage change in net operating income.
• D) the percentage change in sales will be greater than the percentage change in ebit, which in turn will be greater than the percentage change in net income.
• E) the percentage change in net operating income will be greater than a given percentage change in net income.