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Case -6 APEX Corp. is a midsize retail company selling home appliances. APEX faces competition from large national chains as well as local retailers and
Case -6 APEX Corp. is a midsize retail company selling home appliances. APEX faces competition from large national chains as well as local retailers and needs to raise money to finance its expansion into new markets. The company is currently operating at breakeven but believes that the expansion will help it become more profitable. Based on the company's analysis, it plans to open up to ten new retail locations without adding costs to its human resources, accounting, information technology and legal departments. Since the company cannot fund the expansion through operations, it is considering financing options such as issuing more common stock, creating a class of preferred stock, or issuing bonds, convertible securities, or warrants. A. Define operating leverage and describe how the operating leverage created by the expansion will affect the company's return and business risk. B. Define financial leverage
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