Taxes Do Not Enter into the Equation for the Degree

question 38

True/False

Taxes do not enter into the equation for the degree of cash flow of operating leverage because both fixed costs and pretax operating cash flows are measured on a pretax basis.

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Definitions:

Consumer Price Index

A gauge that calculates the mean variation in time of the prices urban consumers pay for a selection of consumer products and services.

Real Rate of Return

The annual percentage return realized on an investment, adjusted for changes in price due to inflation or other external effects.

Portfolio Value

The total worth of all the financial investments held by an individual or institution.

Compounded Quarterly

This refers to the process of applying interest to an initial amount of money (principal) four times a year, at the end of each quarter.