Because the Degree of Total Leverage Is Multiplicative and Not

question 215

Multiple Choice

Because the degree of total leverage is multiplicative and not additive, when a firm has very high operating leverage it can moderate its total risk by

• A) increasing sales.
• B) using more financial leverage.
• C) increasing EBIT.
• D) using a lower level of financial leverage.

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Definitions:

Employment Equity

Policies and practices designed to eliminate discrimination and promote equal opportunity in the workplace for all individuals, regardless of background.

Minority Group Members

Individuals belonging to a socially subordinate group that is distinguished by ethnicity, race, religion, or sexual orientation.

Multiculturalism

A policy or ideology that promotes the representation and participation of diverse cultural traditions and peoples within a society.

Marginalizes

The process by which certain groups or individuals are pushed to the edge of society by not allowing them an active voice, recognition, or rights, effectively keeping them in a lower social standing.