Question
Tell whether the following statements are True or False. Justify your answer. a) A larger proportion of variable costs implies that the company does not
Tell whether the following statements are True or False. Justify your answer.
a) A larger proportion of variable costs implies that the company does not know inadvance the total amount of fees to be paid at the end of the year and therefore increases the company's operating risk. b) Suppose a company that operates in several different business sectors. It isharder to use assets than sales to determine the importance of each sector. c) A company with operating leases rather than capital leases will have a higher asset turnover ratio (Sales / Assets). d) A company should always pursue the objective of minimizing its average collection period because it assures a quicker access to liquidities. e) A company with a positive financial leverage effect necessarily has a low financial risk.
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