Illinois Tool Company's (ITC)fixed Operating Costs Are $1,260,000 and Its

question 41

Multiple Choice

Illinois Tool Company's (ITC) fixed operating costs are $1,260,000 and its variable cost ratio (i.e., variable costs as a fraction of sales) is 0.70. The firm's debt consists of a $6,000,000 bond issue (par value) which pays a coupon rate of 9%. Sales are $9 million per year. What is ITC's degree of financial leverage?

• A)1.20
• B)1.875
• C)3.0
• D)1.60

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Definitions:

Ex Situ Conservation

The preservation of components of biological diversity outside their natural habitats, such as in zoos, aquariums, or botanical gardens.

Biodiversity Hotspot

Geographic regions that are rich in species diversity, including many endemic species, and are under significant threat from human activities.

Ex Situ Conservation

The practice of conserving animals, plants, or their genetic material outside their natural habitat, as in zoos or seed banks.

In Situ Conservation

The process of protecting an endangered species in its natural habitat, as opposed to ex situ conservation, which involves protecting species by removing part of the population from a threatened habitat.