Which of the Following Is a Key Benefit of Using

question 14

Multiple Choice

Which of the following is a key benefit of using the degree of leverage concept in financial analysis?

• A)It allows decision makers a relatively clear assessment of the consequences of alternative actions.
• B)It establishes the optimal capital structure for the firm.
• C)It shows how a given change in leverage will affect sales.
• D)It identifies, with certainty, the future net income based upon sales projections about the future.
• E)None of the above statements is correct.

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Definitions:

Enable

To make a device or system operational; to allow a process or function to proceed.

Permanent Contact

A type of electrical contact that remains closed to ensure a constant flow of electricity, typically used in switches or relays.

Normally Open

A term describing an electrical switch or relay contact that is open (not conducting) when in its default state, closing only in response to a control action.

Normally Closed

A term used to describe a switch or circuit condition where the default state is closed, allowing current to flow unless actuated to open.