An Analytical Technique Called ____ Can Be Used to Help

question 7

Multiple Choice

An analytical technique called ____ can be used to help determine how much leverage a firm should use.

• A)DFL-EPS analysis
• B)EBIT-EPS analysis
• C)DOL-EPS analysis
• D)DOL-EBIT analysis

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Definitions:

Cash Cycles

The amount of time it takes for a business to convert its investments in inventory and other resources into cash flows from sales.

Accounts Payable Turnover

A financial ratio that measures the rate at which a company pays off its suppliers by comparing total purchases to average accounts payable.

Inventory Sold

The total cost of goods or merchandise a business has sold to customers during a specific period, key for calculating cost of goods sold.

Factored Receivables Financing

A financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.