If Debt Financing Is Used, Which of the Following Is

question 55

Multiple Choice

If debt financing is used, which of the following is CORRECT?

• A) The percentage change in net operating income will be equal to a given percentage change in net income.
• B) The percentage change in net income relative to the percentage change in net operating income will depend on the interest rate charged on debt.
• C) The percentage change in net income will be greater than the percentage change in net operating income.
• D) The percentage change in sales will be greater than the percentage change in EBIT, which in turn will be greater than the percentage change in net income.
• E) The percentage change in net operating income will be greater than a given percentage change in net income.

Evaluate the effectiveness of promotional strategies in different demand periods.

Identify the impact of promotions on inventory levels.

Understand the concept of forward buying and its impact on supply chain management.

Apply linear programming to solve sales and operations planning problems.

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Definitions:

Governmental Fund Types

Types of funds used by governmental entities to account for their financial resources, including general, special revenue, debt service, capital projects, and permanent funds.

Modified Approach

Modified Approach is a method in governmental accounting allowing certain assets to be reported at historical cost, exempt from the regular depreciation accounting if they are maintained at predefined condition levels.

Infrastructure Assets

Long-term physical assets that are critical for providing public services, including roads, bridges, and water supply systems.

Maintenance Costs

Expenses incurred to keep an asset in working order or restore it to proper condition; does not improve upon the original asset.