Question
A firm has a profit margin of 5% this year and 4% last year; while the industry average is 4% this year and 5% last
A firm has a profit margin of 5% this year and 4% last year; while the industry average is 4% this year and 5% last year suggests:
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the trend is that the firm is more profitable than the industry average.
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the trend that the profitability of the firm has improved when compared with industry average.
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the trend that the profitability of the firm has deteriorated against the industry average.
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the trend is that the firm is less profitable than industry average.
Pro forma statements are:
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financial statements both in the past and future.
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projected income statements only.
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projected financial statements.
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past financial statements.
A firm with stable cash flows operating in favorable economic conditions should:
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use more debt to maximize share values.
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focus on short-term financing.
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use less debt to maximize share values.
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focus on equity financing.
A firm's operational costs may be classified as:
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fixed and permanent.
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fixed, permanent and variable.
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fixed, variable or semi variable.
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fixed and semi-variable.
The Degree of Financial Leverage of a firm:
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can easily be determined from the balance sheet.
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does not vary with the level of operations of the firm.
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is equal to the break-even point in units.
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varies with the level of EBIT.
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