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18. Financial leverage deals with: A. the relationship of fixed and variable costs. B. the relationship of debt and equity in the capital structure. C.

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18. Financial leverage deals with: A. the relationship of fixed and variable costs. B. the relationship of debt and equity in the capital structure. C. the entire income statement. D. the entire balance sheet. 19. Refer to the figure above. The Degree of Operating Leverage is A. 1.40x B. 1.56 C. 3.33x D. 2.22x 20. Under which of the following conditions coald the overuse of financial leverage be detrimental to the firar? A. Stable industry B. Cyclical derrand for the firm's produets. C. Upswing of business cycle. D. Low interest cost compared to retum on assets II. ESSAY QUESTIONS (33\%) 1. Mex Bookstore, the only bookstore close to campus, had net income in 2021 of $90,000. Here are some of th financial ratios from the annual report. Using these ratios, calculate the following for Max Bookstore: a) Seles b) Total ascets c) Total ascer turnover d) Totar debi Stockbolders equity Retum on equity SWER

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