Which of the following is a key benefit of using the degree of leverage concept in financial analysis?
A. It allows decision makers a relatively clear assessment of the consequences of alternative actions.
B. It establishes the optimal capital structure for the firm.
C. It shows how a given change in leverage will affect sales.
D. It identifies, with certainty, the future net income based upon sales projections about the future.
E. None of the above statements is correct.
Answer: A
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