Which of the Following Is TRUE of Leverage

question 161

Multiple Choice

Which of the following is TRUE of leverage?

• A)It refers to the effects that operating and financial fixed costs have on the returns that shareholders earn.
• B)It is associated with risks which are out of the control of managers.
• C)It includes the effect of operating fixed costs on the returns of shareholders and not the financial fixed costs.
• D)It is used to evaluate the profitability associated with various levels of sales.

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Definitions:

Merger

The combination of two or more companies into a single entity, typically with the aim of boosting competitiveness or market share.

Join Forces

To unite or collaborate with others for a common purpose or goal.

One Entity

Refers to a singular organization, business, or individual regarded as a single unit for legal, financial, or operational purposes.

Merger

The combination of two or more companies into a single entity, with the goal of increasing market share or efficiency.