In the analysis of financial leverage, all of the following are referred to as fixed charges EXCEPT ____.
A) bond interest
B) common stock dividends
C) bank interest
D) preferred stock dividends

Question

Quizplus · Accepted Answer

Fixed charges refer to expenses that a company must pay regardless of their level of sales or income. Bond interest, bank interest, and preferred stock dividends are all fixed charges because they must be paid regardless of the company's financial performance. Common stock dividends, however, are not fixed charges because they are paid out of the company's net income and are therefore dependent on the company's financial performance.

In the Analysis of Financial Leverage, All of the Following