Which of the following statements about highly leveraged companies is true?
A)Fixed costs are high and variable costs are low.
B)Large changes in sales volume result in larger changes in net income.
C)There is a higher possibility of net income or net loss and, therefore, more risk than in a highly leveraged firm.
D)All of these answers are correct.

Question

Quizplus · Accepted Answer

All the statements correctly describe characteristics of highly leveraged companies: high fixed costs and low variable costs, larger changes in net income due to sales volume changes, and higher risk of net income or net loss.

Which of the Following Statements About Highly Leveraged Companies Is