Define financial leverage and discuss how it is used to increase earnings per share.
What will be an ideal response?
Financial leverage occurs when a company earns more income on borrowed money than the related interest expense.
If a company borrows money instead of issuing additional shares of common stock and earns more income on the borrowed money than the related interest expense, earnings per share is higher because net income has increased without changing the shares of common stock.
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Indirect expenses are allocated to departments based on
a. generally accepted accounting principles. b. some reasonable basis. c. directives from the board of directors. d. decisions of the stockholders.
Choose the correct word in parentheses. There (is, are) no good reason to continue the old policy
The objective of a just-in-time inventory system is to totally eliminate all inventories.
Answer the following statement true (T) or false (F)
Who usually enters into employment contracts and what provision is commonly included regarding possible restraint of trade? Explain the purpose of such provisions