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abruzzese [7]
3 years ago
12

​_______________ holds that​ $1 in cost savings increases pretax profits by​ $1, while a​ $1 increase in sales increases pretax

profits by only​ $1 multiplied by the pretax profit margin.
Business
1 answer:
Maslowich3 years ago
8 0

Answer:

Profit leverage effect. The explanation of this question is given below in explanation section.

Explanation:

<u>Profit leverage effect</u> holds that​ $1 in cost savings increases pretax profits by​ $1, while a​ $1 increase in sales increases pretax profits by only​ $1 multiplied by the pretax profit margin.

The profit leverage effect is about reducing operating expenses that is more efficient than increasing sales. It is situated at the start of the production process of a service or product, the procurement stage is in an excellent position to reduce overall costs, especially in the short term. This is why companies often resort to reducing headcount when they run into financial difficulties. Reducing operating costs is the fastest way to produce a short-term impact on the bottom line. A dollar saved in purchasing almost always has a greater impact on profit than a dollar increase in sales. However, it is remember that, only a small portion of each sales dollar makes it to the bottom line. The rest is spent on the costs of doing business—e.g., cost of administrative, goods sold, logistics, and marketing costs. These costs must be deducted from each sales dollar to determine its contribution to operating profit (it is also known as, earnings before interest and taxes). By contrast, every dollar you save through purchasing goes straight to operating profit.

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3 years ago
Exercise 4-15A Calculate net cash flows (LO4-7) Below are several transactions for Meyers Corporation for 2021. Issue common sto
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Answer:

Meyers Corporation

Determining the amount of cash flows:

a. $60,000

b. -$45,000

c. -$1,500

d. $6,000

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f. -$5,000

Classification as operating, investing, or financing activities:

a. Financing

b. Investing

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d. Operating

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f. Financing

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3 years ago
Question 2<br> A style of writing in which the main point is stated early in the message.
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Answer:

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5 0
2 years ago
A restaurant bill is made up of the following: $12.50 for starters, $28.55 for main courses, and $8.95 for deserts, plus a 15% s
Alina [70]

Answer:

The bill is $57.5

Explanation:

The computation of bill is shown below:

= Price for starters + price for main course + price for deserts + service charge tax

= $12.50 + $28.55 + $8.95 + $7.5

= $57.50

The service charge would be calculated by considering all food costing.

In mathematically

= Service tax rate × ( Price for starters + price for main course + price for deserts)

= 15% × ($12.50 + $28.55 + $8.95)

= 15% × $50

=$7.5

Hence, the bill is $57.5

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3 years ago
You lend $5,000 to a friend for one year at a nominal interest rate of 10%. Inflation during that year is 5%. As a result, you w
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