1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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.

You might be interested in
The term _______________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price
hoa [83]

The term <u>price taker</u> refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product. Read below about a perfectly competitive market.

<h3>What is a perfectly competitive market?</h3>

In economics, a perfect market is also known as an atomistic market. A effect competition is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition.

Therefore, in such a market the price taker must take the prevailing market price its product.

learn more about price taker: brainly.com/question/15416827

#SPJ1

6 0
2 years ago
Teams at Systech Corp. come from many different countries, with skills ranging from creativity to communication to search engine
motikmotik

Answer:

Diversity

Explanation:

Team diversity means a team composed people who can be distinguished on  factors like gender, age, demography, culture, range of skill set , nationality, religious and social background. Diversity is promoted in team to promote innovation, efficiency and improved performance as each member complements other with his/her unique attribute.

Since, as Systech corp, team is composed of people with different nationality and diverse skill,  it can be rightly said that such team is example of team diversity based on above mentioned definition of team diversity.

8 0
3 years ago
Ratio of 10% and assuming that banks keep no excess reserves, imagine that $300 is deposited into a checking account. by how muc
ludmilkaskok [199]
<span>If the ratio of 10% and assuming that banks keep no excess reserves, imagine that $300 is deposited into a checking account, then $ 1,287 is the amount for the money supply to increase if the fed lowers the required reserve ratio to 7%.</span>
4 0
3 years ago
The stockholders' equity section of lester company's balance sheet follows:
avanturin [10]
Everything  the includes law .........
5 0
3 years ago
To ensure efficient, clear, communication, the national incident management system characteristics recommend the use of:
Flauer [41]

management system characteristics recommend the use of:

Technical language

4 0
3 years ago
Read 2 more answers
Other questions:
  • The stage at which a project is conceived is known as the ________ process
    11·1 answer
  • What is an engineers primary consideration, according to the NSPE's code of ethics?
    12·1 answer
  • You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 13 percent, –8 percent, 16 perc
    13·1 answer
  • Leon Georges works in the warehouse for a manufacturer of air-purification systems. He is responsible for the transportation of
    15·1 answer
  • Regarding risk levels, financial managers should
    13·1 answer
  • PLEASE HELP!!!!!!!!!!!!!!!!!!!!!!!!! I NEED HELP ASAP!!!!!!!
    10·1 answer
  • If the expected sales volume for the current period is 9,000 units, the estimated the beginning inventory is 200 units and the d
    8·1 answer
  • What is buisness studies​
    14·2 answers
  • Gullett Corporation had $30,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additiona
    10·1 answer
  • K. Decker, S. Rosen, and E. Toso are forming a partnership. Decker is transferring $45,000 of personal cash to the partnership.
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!