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Quiz B
Ch 4b, 5 & 6
Question | Answer |
---|---|
The degree of financial leverage measures the percentage change in EAT for every 1 percent move in EBIT | True: EBIT/EBT |
The contribution margin per unit is equal to price per unit minus variable costs per unit | True: P - VC |
Operating leverage influences the top half of the income statement while financial leverage deals with the bottom | True: DOL= CM/EBIT DFL=EBIT/EBT |
The degree of combined leverage is the degree of operating leverage plus the degree of financial leverage | False: DOL x DFL |