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Write short description of each and every Question either Handwritten or typed. Please discuss briefly why it is false if the answer is false. 1)
Write short description of each and every Question either Handwritten or typed.
Please discuss briefly why it is false if the answer is false. 1) Generally, increases in leverage result in increased return and risk. 2) Breakeven analysis is used by the firm to determine the level of operations necessary to cover all fixed operating costs and to evaluate the profitability associated with various levels of sales. 3) Firm's capital structure is the mix of the short-term debt, long-term debt, and equity maintained by the firm. 4) The levels of fixed-cost assets and funds that management selects affect the variability of returns. 5) Earnings before interest and taxes are positive above the operating breakeven point, and a loss occurs below it. 6) For sales levels below the operating breakeven point, sales revenue exceeds total operating costs, and earnings before interest and taxes is greater than zero. 7) An increase in cost (fixed cost or variable cost) tends to increase the operating breakeven point, whereas an increase in the sales price per unit will decrease the operating breakeven point. 8) Since the sales price per unit generally decreases with volume and the cost per unit generally increases with volume, the true breakeven point may be different from those obtained using linear revenue and cost functions as assumed in the breakeven analysis. 9) While operating leverage results only in a magnification of returns, financial leverage results only in a magnification of risk. 10) Operating leverage is present when a firm has fixed operating costsStep by Step Solution
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