If an Organization's Variable Costs Are Relatively High Then the Strategic

question 21

Multiple Choice

If an organization's variable costs are relatively high then the strategic focus is on

• A) input costs
• B) interest rates
• C) contribution
• D) technology

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Definitions:

Interest Tax Shield

The reduction in income taxes that results from the deductibility of interest expense from taxable income.

Capital Structure

The mix of debt and equity financing a company uses for its operations and growth.

Optimal Capital Structure

Optimal capital structure is the mix of debt, equity, and other financing sources that minimizes a firm's cost of capital and maximizes shareholder value, balancing risk and return.