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Company ABC operates as a service provider in Australia. Recently, the company has re-organised its business such that all of its operating costs are variable
Company ABC operates as a service provider in Australia. Recently, the company has re-organised its business such that all of its operating costs are variable costs. Further, the company has issued 100 million new shares, the proceeds from which were used to retire all of its outstanding debt. Following these changes, and assuming a constant tax rate, we would expect: A. The volatility in revenues to exceed the volatility in net income B. The volatility in EBITDA to exceed the volatility in revenues C. The volatility in net income to exceed the volatility in revenues D. The volatility in net income to be equal to the volatility in revenues E. The volatility in revenues to exceed the volatility in EBITDA Company ABC operates as a service provider in Australia. Recently, the company has re-organised its business such that all of its operating costs are variable costs. Further, the company has issued 100 million new shares, the proceeds from which were used to retire all of its outstanding debt. Following these changes, and assuming a constant tax rate, we would expect: A. The volatility in revenues to exceed the volatility in net income B. The volatility in EBITDA to exceed the volatility in revenues C. The volatility in net income to exceed the volatility in revenues D. The volatility in net income to be equal to the volatility in revenues E. The volatility in revenues to exceed the volatility in EBITDA
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