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Corporate Finance Online

Business

Quiz 12 :

Capital Structure

Quiz 12 :

Capital Structure

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What type of firm should have the least amount of operating leverage?
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Multiple Choice
Answer:

Answer:

C

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Capital structure may be defined as
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Multiple Choice
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Answer:

D

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Gentech, Inc. is an integrated circuit (microchip)manufacturer based out of New Jersey. Its principal products include microprocessors and motherboard chipsets. Selected financial statement values for Gentech are shown in the table, below. What is the degree of financial leverage for Gentech given the change in earnings from Year 1 to Year 2? img
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Multiple Choice
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Answer:

A

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Jerry's Dog Food, Inc. is a dog food wholesaler located in Greenwich, Connecticut. Selected financial statement values for Jerry's are shown in the table below. What is the degree of operating leverage for Jerry's given the change in revenues from Year 1 to Year 2? img
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Durosteel Shafts Inc. supplies cam shafts to GM for their popular Chevy Malibu model. Automobile sales fell significantly during the recent financial crisis. Now, at the end of Year 1, GDP is growing again and GM is forecasting an increase in automobile sales of 11% over the coming year. Use the data in the table to estimate Durosteel's operating profit margin (EBIT/Sales)for Year 2. img
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The degree of operating leverage is defined as:
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If sales are expected to increase 25%, EBIT is expected to increase 15%, and EPS is expected to increase 10%, what is the degree of operating leverage?
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Gentech, Inc. is an integrated circuit (microchip)manufacturer based out of New Jersey. Its principal products include microprocessors and motherboard chipsets. Selected financial statement values for Gentech are shown in the table, below. What is the degree of operating leverage for Gentech given the change in revenues from Year 1 to Year 2? img
Multiple Choice
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Over the last year, sales at Downscale Department Store increased 10% and EBIT increased 5%. If the increase in earnings-per-share was 20%, what is the degree of total leverage?
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A 20% increase in sales causes EPS to rise from $4.00 to $6.50. Assuming the firm has no debt, what is its degree of operating leverage (DOL)?
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Which of the following statements is true?
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Gold-Jerry Gold Corporation is a mid-tier gold producer listed on the New York Stock Exchange. It is currently the end of Year 1, and the fiscal situation in the U.S and Europe is dire. Kenny Bania, an analyst at Gold-Jerry, forecasts that gold prices will rise during Year 2, since gold is regarded as a safe investment haven during periods of economic uncertainty. Bania is forecasting that Gold-Jerry's revenues will increase by 25% in Year 2. Use the data in the table to estimate Gold-Jerry's operating profit margin (EBIT/Sales)for Year 2. img
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________ leverage is increased by having greater amounts of debt in the capital structure.
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The degree of financial leverage is defined as:
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Jerry's Dog Food, Inc. is a dog food wholesaler located in Greenwich, Connecticut. Selected financial statement values for Jerry's are shown in the table below. What is the degree of financial leverage for Jerry's given the change in earnings from Year 1 to Year 2? img
Multiple Choice
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A 10% increase in sales causes EPS to rise from $0.50 to $0.56. Assuming the firm has no debt, what is its degree of operating leverage (DOL)?
Multiple Choice
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For a given level of EBIT, greater changes in EPS produce
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If sales increase 25%, EBIT increases 50%, debt increases 75%, and working capital increases 12.5%, what is the degree of operating leverage?
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The degree of operating leverage varies with the level of
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If EBIT increases 15%, EPS increases by 30%, debt increases by 45%, and the tax rate declines by 5%, what is the degree of financial leverage?
Multiple Choice
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