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navik [9.2K]
3 years ago
6

If a firm utilizes debt financing, a 10% decline in earnings before interest and taxes (EBIT) will result in a decline in earnin

gs per share that is larger than 10%, and the higher the debt ratio, the larger this difference will be.
True or False?
Business
1 answer:
zysi [14]3 years ago
6 0

Answer:

True

Explanation:

It is easier to explain following an example:

EBIT 100

debt interests 25

shares outstanding 500

                            No change scenario      -10% EBIT          +10% EBIT

EBIT                              100                              90                       110

<u>interests                       (25)                             (25)                      (25)     </u>

net income                    75                               65                        85

earnings per share      0.15                            0.13                      0.17

change                           -                              -13.3%                  +13.3%

A 10% EBIT decrease will result in a 13.3% decrease in earnings per share, while a 10% EBIT increase will result in a 13.3% increase in earnings per share.

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BaLLatris [955]

Answer:

Mark will have 125,420.81

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Explanation:

If you start with 125,000.00 in a savings account earning a 5.5% interest rate, compounded Daily,  after 22 Days your savings account will have grown to 125,420.81 of which 125,000.00 is the total of your beginning balance plus deposits, and 420.81 is the total interest earnings.

6 0
4 years ago
Principles of law that reflect the customs and usages of society and are found in judicial decisions are called:_____
grandymaker [24]

Answer:

The correct answer is letter "C": common law.

Explanation:

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7 0
3 years ago
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Sphinxa [80]

Answer:

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4 0
4 years ago
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Answer:

$500 favorable

Explanation:

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Therefore,

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