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kolbaska11 [484]
3 years ago
10

"The degree of financial leverage is the ratio of​" ________ to percentage change in EBIT. A. operating profit B. percentage cha

nge in sales C. longminus term debt D. percentage change in EPS
Business
2 answers:
Luda [366]3 years ago
5 0

Answer:

D. percentage change in EPS

Explanation:

Leverage is an investment strategy of using borrowed money specifically, the utilization of varied financial instruments or borrowed capital to increase the potential return of an investment. Leverage also can be the quantity of debt a firm uses to finance assets. When one refers to a corporation , property or investment as "highly leveraged," it means item has more debt than equity.

The concept of leverage is employed by both investors and corporations . Investors use leverage to significantly increase the returns which will be provided on an investment. They lever their investments by using various instruments that include options, futures and margin accounts. Companies can use leverage to finance their assets. In other words, rather than issuing stock to boost capital, companies can use debt financing to take a position in business operations in an effort to extend shareholder value.

One can calculate the degree of operating leverage by dividing the share change of a company's earnings per share (EPS) by its percentage (%) change in its earnings before interest and taxes (EBIT) over a period.

A better degree of operating leverage shows a better level of volatility during a company's EPS.

Radda [10]3 years ago
3 0

Answer:

The correct answer is D. percentage change in EPS.

Explanation:

The degree of operating leverage and the degree of financial leverage are two indicators used in the fundamental analysis to determine the sensitivity of income in relation to fluctuations in another variable. The degree of operating leverage quantifies the relationship between earnings before interest and taxes (EBIT), while the degree of financial leverage quantifies the relationship between earnings per share (EPS) and EBIT.

Financial leverage consists of the use of external funds of the company to allocate to investments. To put it another way, the investor increases the amount invested by using external resources (debts) that is added to the own resources in order to obtain greater profitability by increasing the total amount invested.

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3 years ago
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A credit sale is made on July 10 for $900, terms 1/15, n/30. On July 12, the purchaser returns $100 of goods for credit. Give th
balu736 [363]

Answer:

                                      Dr.      Cr.

July 19

Cash                            $792

Discount expense      $8

Account Receivable              $800

Explanation:

The term 1/15, n/30 mean there is a discount of 1% is available on the sales value, if payment is made within 15 days of sale with credit term of 30 days.

The sale of $900 was made on July 10 and discount period is until July 25.

On July 12 goods amounting $100 was returned and now the amount due from the customer is $800 ( $900 - $100 ).

The payment made on July 19 is actually in the discount period and it is eligible for the discount as it is made before July 25.

Discount = Amount due x Discount rate

Discount = $800 x 1% = $8

$792 Cash received against the sale made on July 10 and discount $8 is expensed. Total of $800 is credited from the account receivable account to eliminate it.

5 0
3 years ago
Fashion, Inc. had a Retained Earnings balance of $16,000 at December 31, 2021. The company had an average income of $6,500 over
avanturin [10]

Answer:

Total amount of dividends paid over the last three years is $20500

Explanation:

The net income of the company is either retained in the company or paid out as dividends. To calculate the value of the ending retained earnings, we use the following formula,

Ending balance = Beginning balance + Net Income - Dividends

We first need to calculate the total net income for the 3 year period. The total net income for the 3 year period is, 3 * 6500 = $19500

Plugging in the available values for the ending and beginning balance of retained earnings and net income, we can calculate the value of total dividends paid for the three year period.

15000 = 16000 + 19500 - Dividends

Dividends = 35500 - 15000

Dividends = $20500

4 0
3 years ago
Which of the following is NOT example of Capital used to produce goods?
riadik2000 [5.3K]

Answer:

Some examples of capital used to produce goods are machinery, human workers, equipment, basically anything that is used by a factory in the production process. You didnt list any options so I can't tell you which one isn't, but I hope this helps!

Explanation:

7 0
3 years ago
Cash donations to public charities are limited to % of a taxpayer's AGI. Donations of capital gain property to public charities
Blababa [14]

Answer:

Cash donations to public charities are limited to % of a taxpayer's AGI? Cash donations can be deducted to a maximum of 60% of your AGI.

Donations of capital gain property to public charities are generally limited to % of a taxpayer's AGI? If you hold the assets (whether stock or property) for more than one year, donations can be deducted (at fair market value) to a maximum of 30% of your AGI.

Donations of certain capital gain property to private non operating foundations are limited to % of AGI? When you donate short term capital gain property to private non operating foundations you can deduct up to 30% of your AGI.

3 0
3 years ago
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