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:

Relevant Range

The scope of operations within which the assumptions regarding the behavior of variable and fixed costs hold true.

Cost Formula

An equation used to calculate the total cost of production that combines both fixed costs and variable costs.

Production Variation

Fluctuations in the quantity of goods produced, often due to changes in demand or production capacity.

Variable Operating Expenses

Operating costs that vary in proportion to the level of business activity or output, such as sales commissions and utility bills.