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Molodets [167]
3 years ago
13

“EBIT is generally considered to be independent of financial leverage, because EBIT is the result of a firm’s operating effectiv

eness. However, with an excessive debt levels, EBIT might actually be influenced by financial leverage.”
Comment on the statement above.
Business
1 answer:
Arturiano [62]3 years ago
6 0

Answer:

The answer is below

Explanation:

EBIT is known as an accounting measure to determine the profit level of a firm. It is an acronym of Earnings Before Interest and Taxes.

EBIT is generally considered to be independent of financial leverage because EBIT is the result of a firm’s operating effectiveness.

This is true because, EBIT is based on the firm's level of sales and cost of operation, of which financial leverage has no effects on it.

However, with excessive debt levels, EBIT might be influenced by financial leverage.

This implies that even though the financial leverage of a firm has no direct influence on EBIT, in a situation whereby a firm is operating at huge deficits, every aspect of the film will be concerned. This will include staff, customers, investors, and operational activities, thereby affecting the firm's sales and cost of operation. As a result, this will ultimately affect the firm's EBIT.

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Phân tích điều kiện bản thân với tư cách là người chủ doanh nghiệp
Nataly [62]

Answer:

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8 0
2 years ago
In the month of June, a department had 19900 units in beginning work in process that were 75% complete. During June, 90200 units
balandron [24]

Answer:

103,500 units

Explanation:

Equivalent units calculation - conversion costs

Completed and transferred units (99,100 x 100 %)   = 99,100 units

Ending Work in Process units (11000 x 40%)             =  4,400 units

Total Equivalent units                                                  = 103,500 units

therefore,

The equivalent units of production for conversion costs for June were 103,500 units

7 0
3 years ago
(Assumptions, Principles, and Constraint) Presented below are the assumptions, principles, and
LuckyWell [14K]

The accounting principles, assumptions, and constraints describes are identified as follows: A) 7, B) 6, C) 8, D) 9, E) 1, F) 4, G) 3.

<h3>What are Accounting Principles?</h3>

These are rules or laws that govern the reporting and recording of the financial information of a business.

7 - Expense Recognition Principle: This holds the rule of thought that expenses made ought to be recorded in the books or recognized in the same time frame as the revenue transactions they are related to.

3 - Monetary Unit Principle: This law indicates that if a transaction cannot be expressed in a currency, then it shouldn't be recorded. This means "in-kind" transactions and favors hold no place in proper Financial Bookkeeping practice.

See the link below for more about Accounting Principles:

brainly.com/question/23008273

5 0
2 years ago
Leker exchanged real property that was used exclusively for business and had an adjusted tax basis of $20,000 for new real prope
goldfiish [28.3K]

Answer:

$17,000

Explanation:

Leker's Old Property Adjusted Tax Basis = $20,000

To calculate the new basis, subtract the $3000 recieved in cash from the new property.

New Tax Basis; $20,000-$3,000= $17,000

The transaction of Leker to exchange a real property for another led to a loss: Meaning a Property of $20,000 was exchanged for a property of $10,000+ $3,000 (cash)= $13,000

The Loss on the transaction= $20,000- $13,000= $7,000

Due to the loss no gain is recognized and the $3000 will reduce the basis for his new asset.

6 0
3 years ago
Deferral adjustments are needed when the business:_______
Mnenie [13.5K]

Answer: b. pays cash before the expense has been incurred.checked

d. receives cash before the revenue has been generated

Explanation:

Here is the complete question:

Deferral adjustments are needed when the business:

a. pays cash after the expense has been incurred.unchecked

b. pays cash before the expense has been incurred.checked

c. receives cash after the revenue has been generated.unchecked

d. receives cash before the revenue has been generated.

Adjustments are made during the end of every accounting period in order to report the revenues and the expenses in proper period at which they occur and also in order to report the assets and the liabilities at their appropriate amounts.

Deferral adjustment is when the revenue or the expense has been deferred or postponed and will therefore be reported on the income statement at a later period.

Previously deferred amounts will show on the balance sheet when a company pays cash before having to incur the expense or in a case whereby the company gets and collects cash before earning the revenue.

When revenues are made or when expenses are incurred, the previously deferred amounts will have to be adjusted and then, the amounts will be transferred to income statement through the use of the deferral adjustment.

5 0
3 years ago
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