Which of the following is true of the degree of total leverage (DTL)??
A. ?It is the percentage change in EPS that results from a given percentage change in EBIT.
B. ?It is the level of EBIT at which EPS equals zero.
C. ?It is the percentage change in NOI (or EBIT) associated with a given percentage change in sales.
D. ?It represents the level of production and sales at which net operating income is zero.
E. ?It is the percentage change in EPS that results from a 1 percent change in sales.
Answer: E
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A times interest earned ratio of 0.90 to 1 means:
a. that the firm will default on its interest payment. b. that net income is less than the interest expense. c. that the cash flow is less than the net income. d. that the cash flow exceeds the net income. e. none of the answers are correct.
Which of the following statements regarding cash equivalents is correct?
a. A one-year Treasury note could not qualify as a cash equivalent. b. All investments meeting the FASB's criteria for cash equivalents must be reported as such. c. The date a security is purchased determines its "original maturity" for cash equivalent classification purposes. d. Once established, management's policy for classifying items as cash equivalents cannot be changed.
In 2014, Ryan Corporation reported $85,000 net income before income taxes. The income tax rate for 2014 was 30 percent. Ryan had an unused $65,000 net operating loss carryforward arising in 2013 when the tax rate was 35 percent. The income tax expense Ryan would report for 2014 would be
a. $7,000. b. $6,000. c. $24,600. d. $32,000.
Sensitivity analysis is the analysis of the effect of ________ changes on the ________
A) price, company B) cost, production C) parameter, optimal solution D) constraint, parameter