Which of the following statements about combined (operating & financial) leverage is true?
A) Usage of both operating and financial leverage reduces a firm's risk.
B) If a firm employs both operating and financial leverage, any percent change in sales will
produce a larger percent change in earnings per share.
C) A firm that is in a capital-intensive industry should use a higher level of financial leverage
than a firm that employs low levels of operating leverage.
D) High operating leverage and high financial leverage offset one another, meaning that if sales
increase by 10%, then EPS will also increase by 10%.
B
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Which of the following statements about tendencies in managerial decision making is false?
A. Managers make decisions too quickly. B. Managers don't consider all the relevant data. C. Managers study the problem too extensively and collect too much data. D. Managers take the easy solution without rigorously considering alternatives. E. Managers don't invest resources to properly study the problem and alternative courses of action.
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.
All procedural rulemaking rules may be exempted in each of the following situations
except: a. government personnel issues b. foreign affairs issues c. military issues d. agency management issues
What type of cash flow financing loan can make funds available for up to 10 years?
A. Installment loans B. Long-term loans C. Character loans D. Real estate loans