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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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Answer:

Purchase of raw materials

Raw Materials $62,000 (debit)

Cash $62,000  (credit)

Direct materials requisation

Work - In - Processs : Production Department $50,000 (debit)

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Explanation:

Purchase of raw materials

Raw Materials $62,000 (debit)

Cash $62,000  (credit)

<em>Recognise Asset - Raw Materials and De-recognise Asset - Cash</em>

Direct materials requisation

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<em>Recognise Cost of Production in Work in Process (Production department) and De-recognise the Asset - Raw Materials</em>

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Mariulka [41]

Answer:

c) the incentive structure accompanying market prices.

Explanation:

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Answer: See explanation

Explanation:

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Some of the contemporary socio-economic issues that are faced by the society are poverty, corruption, illteracy, unemployment, etc.

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