Exam 10: Leverage and Capital Structure

A sales commission may be considered as a semivariable cost because it may be fixed for a certain volume of sales and then increase to higher levels for higher volume.

(True/False)

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Question 121

The long-term funds of the firm are called

(Multiple Choice)

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Question 122

Using debt to raise capital is frequently viewed as a___________signal by the financial community.

(Multiple Choice)

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Question 123

The firm's capital structure is a mix of the short-term debt, long-term debt, and equity maintained by the firm.

(True/False)

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Question 124

An increase in fixed operating costs will result in_________in the degree of operating leverage.

(Multiple Choice)

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Question 125

If a firm's sale price per unit decreases, the firm's operating break-even point will

(Multiple Choice)

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Question 126

Whenever the percentage change in EBIT resulting from a given percentage change in sales is greater than the percentage change in sales, operating leverage exists.

(True/False)

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Question 127

The firm's capital structure can significantly affect the firm's value by affecting its risk and return.

(True/False)

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Question 128

Total leverage can be defined as the potential use of fixed costs, both operating and financial, to magnify the effect of changes in sales on the firm's earnings per share.

(True/False)

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Question 129

A firm has fixed operating costs of $253,750, a sales price per unit of $100, and a variable cost perunit of $65. The firm's operating break-even point in dollars is__________ .

(Multiple Choice)

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Question 130

The higher the financial break-even point and the steeper the slope of the capital structure line, the greater the financial risk.

(True/False)

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Question 131

The base level of sales must be held constant to compare the total leverage associated with differentlevels of fixed costs.

(True/False)

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Question 132

The inexpensive nature of long-term debt in a firm's capital structure is due to the fact that

(Multiple Choice)

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Question 133

The firm's operating break-even point is the point at which

(Multiple Choice)

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Question 134

Poor capital structure decisions can result in a high cost of capital, thereby making some unacceptable investments acceptable.

(True/False)

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Question 135

Leverage results from the use of fixed-cost assets or funds to magnify returns to the firm's owners.

(True/False)

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Question 136

In default, debtholders and preferred stockholders may receive a voice in management; otherwise,only common stockholders have voting rights.

(True/False)

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Question 137

As fixed operating costs increase and all other factors are held constant, the degree of operating leverage will

(Multiple Choice)

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Question 138

The firm's capital structure is the mix of short-term and long-term debt and equity maintained by the firm.

(True/False)

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Question 139

Operating leverage is concerned with the relationship between the firm's sales revenue and its operating expenses.

(True/False)

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Question 140

Showing 121 - 140 of 168

A sales commission may be considered as a semivariable cost because it may be fixed for a certain volume of sales and then increase to higher levels for higher volume.

The long-term funds of the firm are called

Using debt to raise capital is frequently viewed as a___________signal by the financial community.

The firm's capital structure is a mix of the short-term debt, long-term debt, and equity maintained by the firm.

An increase in fixed operating costs will result in_________in the degree of operating leverage.

If a firm's sale price per unit decreases, the firm's operating break-even point will

Whenever the percentage change in EBIT resulting from a given percentage change in sales is greater than the percentage change in sales, operating leverage exists.

The firm's capital structure can significantly affect the firm's value by affecting its risk and return.

Total leverage can be defined as the potential use of fixed costs, both operating and financial, to magnify the effect of changes in sales on the firm's earnings per share.

A firm has fixed operating costs of $253,750, a sales price per unit of $100, and a variable cost perunit of $65. The firm's operating break-even point in dollars is__________ .

The higher the financial break-even point and the steeper the slope of the capital structure line, the greater the financial risk.

The base level of sales must be held constant to compare the total leverage associated with differentlevels of fixed costs.

The inexpensive nature of long-term debt in a firm's capital structure is due to the fact that

The firm's operating break-even point is the point at which

Poor capital structure decisions can result in a high cost of capital, thereby making some unacceptable investments acceptable.

Leverage results from the use of fixed-cost assets or funds to magnify returns to the firm's owners.

In default, debtholders and preferred stockholders may receive a voice in management; otherwise,only common stockholders have voting rights.

As fixed operating costs increase and all other factors are held constant, the degree of operating leverage will

The firm's capital structure is the mix of short-term and long-term debt and equity maintained by the firm.

Operating leverage is concerned with the relationship between the firm's sales revenue and its operating expenses.

Overview of Corporate Finance

Financial Statements, Cash Flows, and Taxes

Financial Statement Analysis

Financial Planning and Forecasting

Financial Markets, Institutions, and Securities

Time Value of Money

Risk and Return

Valuation of Financial Securities

The Cost of Capital

Dividend Policy

Capital Budgeting: Principles and Techniques

Dealing With Project Risk and Other Topics in Capital Budgeting

Working Capital and Management of Current Assets

Management of Current Liabilities

Lease Financing: Concepts and Techniques

Corporate Securities, Derivatives, and Swaps

Mergers and Acquisitions, and Business Failure

International Corporate Finance

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