Changing a Company's Cost Structure May Affect

question 114

Multiple Choice

Changing a company's cost structure may affect

• A)Operating leverage.
• B)Behavioral implications for employees.
• C)Both operating leverage and behavioral implications for employees.
• D)Neither operating leverage nor behavioral implications for employees.

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Definitions:

Borrow

The act of receiving money, goods, or services from a lender or institution under an agreement to return or repay it in the future.

Stock Price

The cost of purchasing a single share of a particular stock on the stock market.

Levered Firm

A company that utilizes debt financing as a significant portion of its capital structure.