Please answer the following questions:

1.) Assume that two firms have the same operating profit margin of 28%. Firm A has a net profit margin of 14%, however, while Firm B has a net profit margin of 18%. Which of the following is the probable reason for this? o Firm A has more interest expense than Firm B. o Firm A has more depreciation and amortization expense than Firm B. O Firm A has a higher cost of goods sold than Firm B. All of the above are possible reasons for the stated results. These algorithmic problems were present in earlier semesters, and have been used to create Graded Homeworks for Weeks 2 to 12 and the Final. Finance and Economics Department policy is that all Quiz and Exam questions should reside in the Question Library. 2.) What does a firm's degree of operating leverage (DOL) indicate? o If net sales increase, then operating income is expected to rise o The degree of operating leverage requires more than one observation of sales, variable costs and fixed costs 0 The degree of operating leverage cannot be used to cannot be used to forecast operating income. o The degree of leverage measures the sensitivity of operating income (EBIT) to changes in unit sales 3.) How would a firm use cost-volume-profit (breakeven) analysis? O Breakeven analysis is used by managers to estimate operating income at different levels of unit sales Knowing the breakeven point allows managers to know ho many units of product must be sold so a loss does not occur Breakeven analysis is unimportant to managers Both A and B 0 0