Matching
Match the following with the items below:
Premises:
A measure of the impact of debt on the earnings capability of the firm.
A reflection of the extent that fixed assets and fixed costs are utilized in the business firm.
A measure of the impact of fixed costs on earnings from the operation's viewpoint of the firm.
A numerical and graphical technique used to determine at what point the firm will equate its costs and revenues.
The total impact of operating and financial leverage.
A measure of the amount of debt used in the capital structure of the firm.
Costs that remain relatively constant regardless of the volume of sales, as long as they are within the company's relevant range.
A measure of the total effect on earnings per share of operating and financial leverage.
Costs that move directly with a change in volume.
The amount of fixed costs covered by each unit of sales. This amount is derived by subtracting variable cost per unit from the sales price of each unit.
The use of break-even analysis based on the assumption that cost and revenue relationships to quantity sold may vary at different levels of sales.
The use of fixed charge obligations with the intent of magnifying the potential returns to the owners of the firm.
Responses:
nonlinear break-even analysis
break-even analysis
combined leverage
contribution margin
degree of financial leverage
leverage (concept in general)
financial leverage
operating leverage
fixed costs
degree of combined leverage
variable costs
degree of operating leverage
Correct Answer:
Premises:
Responses:
A measure of the impact of debt on the earnings capability of the firm.
A reflection of the extent that fixed assets and fixed costs are utilized in the business firm.
A measure of the impact of fixed costs on earnings from the operation's viewpoint of the firm.
A numerical and graphical technique used to determine at what point the firm will equate its costs and revenues.
The total impact of operating and financial leverage.
A measure of the amount of debt used in the capital structure of the firm.
Costs that remain relatively constant regardless of the volume of sales, as long as they are within the company's relevant range.
A measure of the total effect on earnings per share of operating and financial leverage.
Costs that move directly with a change in volume.
The amount of fixed costs covered by each unit of sales. This amount is derived by subtracting variable cost per unit from the sales price of each unit.
The use of break-even analysis based on the assumption that cost and revenue relationships to quantity sold may vary at different levels of sales.
The use of fixed charge obligations with the intent of magnifying the potential returns to the owners of the firm.
Premises:
A measure of the impact of debt on the earnings capability of the firm.
A reflection of the extent that fixed assets and fixed costs are utilized in the business firm.
A measure of the impact of fixed costs on earnings from the operation's viewpoint of the firm.
A numerical and graphical technique used to determine at what point the firm will equate its costs and revenues.
The total impact of operating and financial leverage.
A measure of the amount of debt used in the capital structure of the firm.
Costs that remain relatively constant regardless of the volume of sales, as long as they are within the company's relevant range.
A measure of the total effect on earnings per share of operating and financial leverage.
Costs that move directly with a change in volume.
The amount of fixed costs covered by each unit of sales. This amount is derived by subtracting variable cost per unit from the sales price of each unit.
The use of break-even analysis based on the assumption that cost and revenue relationships to quantity sold may vary at different levels of sales.
The use of fixed charge obligations with the intent of magnifying the potential returns to the owners of the firm.
Responses:
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