1. Muhamad is preparing to submit projections for his IT companys master budget. He is requesting a substantial increase in his operational budget to ensure the successful launch of a new security software product. Although there is no guarantee that this product will be profitable, Muhamad hopes that leadership understands the importance of putting forth their best effort on a product with a larger-than-average potential payoff. This way of thinking illustrates what is known as the _________ of a financial opportunity.

A. financial leverage

B. asset management ratio

C. financial capital

D. risk-return trade-off

2. Angela owns and operates an independent gas station. She continually evaluates how her business leverages debt versus equity to achieve the long-term plans she has set out for the business, like an eventual expansion of the grab-and-go food section and a bathroom remodel. This approach to evaluation illustrates how Angela manages her businesss ____________.

A. risk

B. net profit margin

C. liquid assets

D. finances

3.

Scenario 9.1.

Dario works in finance at a healthcare start-up that has a higher-than-average tax burden. The chief financial officer (CFO) has asked Dario to make some recommendations on how the company can reduce taxes without sacrificing their access to financial resources.

Refer to Scenario 9.1. After reviewing the firms current capital structure, Dario recommends that they increase the amount of debt they have versus the amount of assets. Dario is advocating that they increase their _____________.

A. interest coverage

B. net profit margin

C. financial leverage

D. inventory turnover