Lyceum CoReported Profit of $8

question 34

Essay

Lyceum Co.reported profit of $8.3 million,interest expense of $.5 million and they are in a 30% tax rate bracket.Their average total assets are $65.8 million and average shareholders' equity is $48.6 million.What is Lyceum's financial leverage advantage or disadvantage?
A.3.7%
B.3.9%
C.4.0%
D.4.7%

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Definitions:

Traditional Costing

An accounting method that applies indirect costs to products based on a predetermined rate, not necessarily reflecting the actual usage of resources.

Direct Labor-Hours

The total hours worked directly on a manufacturing process or project.

Traditional Costing

An accounting method that allocates manufacturing overhead costs to products based on the volume of production resources consumed.

Direct Labor-Hours

A measure of the work done by employees directly involved in the manufacturing process, counted in hours.