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trapecia [35]
3 years ago
9

When comparing levered vs. unlevered capital structures, leverage works to increase EPS for high levels of operating income beca

use interest payments on the debt (a) vary with EBIT levels. (b) stay fixed, leaving less income to be distributed over fewer shares. (c) stay fixed, leaving less income to be distributed over more shares. (d) stay fixed, leaving more income to be distributed over fewer shares. (e) decrease, leaving more income to be distributed over fewer shares
Business
1 answer:
Leviafan [203]3 years ago
4 0

Answer:

The answer is D.

Explanation:

Unlevered capital structure is the one where there is no debt in the company, the company is completely financed by using equity. While levered capital structure involves the combination of both debt and equity in the company.

For a company, debt is an effective tool to raise funds for expansion without diluting or reducing ownership control by adding more shareholders.

Interest payment on debt is usually fixed.

Going for leverage does not increase the number of shares and Earnings Per Share(EPS) will be higher because earnings or income will be distributed to fewer shareholders unlike unlevered capital structure that tends to add to the number of shares thereby lowering EPS because earnings will be distributed to larger shareholders.

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Stiner has chosen to accrue the liability for compensated absences at the rates of pay in effect when the compensated time is ea
marshall27 [118]

Answer:

True

Explanation:

A compensated absence is employee time off with pay, which can arise in such situations as sick leave, holidays, vacations, and jury duty. To account for compensated absences, it is not necessary to separately recognize them when they are earned and used within the same period, since it is typically rolled into the general compensation expense. However, they must be charged to expense and recorded as a liability when they are earned and their use is deferred to a later period.

An employer should accrue a liability for compensated absences payable to employees for their future absences, but only if all of the following conditions are met:

• The payment obligation for future absences is based on employee services already rendered.

• The amount of the obligation can be reasonably estimated.

• Payment is probable.

• The obligation is for employee rights that vest or accumulate.

5 0
3 years ago
During its 2021 fiscal year, Jacobsen corporation reported before tax income of 620,000
mixer [17]

Income before tax is the income that is before it has been taxed or before applying deduction.

<u>Explanation:</u>

An individual or organization's salary before taxes and deductions is before tax income for that company, organisation or for a single individual.

For singular pay, it is determined as the person's wages or pay, venture and resource gratefulness, and the sum produced using some other wellspring of pay. In an organization, it is determined as incomes less costs.

6 0
4 years ago
Steve’s Outdoor Company purchased a new delivery van on January 1 for $47,000 plus $4,000 in sales tax. The company paid $13,000
cupoosta [38]
Sorry idk the answers i’m just trying to ask my questions... sorry
3 0
3 years ago
What costs are considered “relevant” and which are considered “irrelevant “to a business
Klio2033 [76]

Answer:

Relevant costs are costs that will be affected by a managerial decision. Irrelevant costs are those that will not change in the future when you make one decision versus another.

Explanation:Examples of irrelevant costs are sunk costs, committed costs, or overheads as these cannot be avoided.

4 0
3 years ago
Below is information from the financial statements of Greenwich Company: Accounts receivable (net) 2016: $2,400 Accounts receiva
ra1l [238]

Answer:

32.44 days

Explanation:

The computation of the average collection period is shown below:

But before that we have to determine the account receivable turnover ratio

So, the account receivable turnover ratio is

= (net sales) ÷ (average of account receivables)

= $25,875 ÷ ($2,400 + $2,200) ÷ 2

= $25,875 ÷ $2,300

= 11.25 times

Now the average collection period is

= Total no of days in a year ÷ account receivable turnover ratio

= 365 ÷ 11.25

= 32.44 days

We assume that the no of days that should be considered is 365 days

7 0
3 years ago
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