“One type of leverage affects both EBIT and EPS. The other type affects onlyEPS.” Explain this statement

Q: What is operating leverage, and for what is it used?

A: Operating Leverage is a cost-accounting formula used to measure the growth of its operating income.…

Q: Which of the following statements about the relationship between the IRR and the MIRR is correct? A…

A: The IRR is the investment discount rate that corresponds to the difference between the original…

Q: Briefly describe the connection and the difference between CAPM and Single Index Model (SIM).

A: Capital Asset Pricing Model or CAPM referred to as the relationship between the systematic risk and…

Q: What does this statement mean? One type of leverage affects both EBIT and EPS. The other type…

A: Operating leverage is based on the cost structure of the company. It is the extent of fixed and…

Q: Define degree of operating leverage.

A: The degree of operating leverage (DOL) is a financial ratio that measures the sensitivity of a…

Q: Which would changes in leverage have no effect on FCFE or FCFF, explain your answer

A: Free cash flow to firm(FCFF) is the cash flow available to supplier of capital. Free cash flows to…

Q: What is Operating Leverage and is it good or bad?

A: It can be characterized as how much a firm brings about a mix of fixed and variable expenses. In…

Q: Define the term leverage. And method of computing degree of leverage.

A: Financial Accounting:- The term financial accounting includes recording, summarizing and reporting…

Q: What is meant by convergence of US GAAP?

A: IFRS (International Financial Reporting System) is gaining popularity and momentum across all the…

Q: ccording to Miller and Modigliani, it is at really determines a firm's value.

A: According to M&M, value of firm is the sum of present value of all future cash flows.

Q: Define degree of operating leverage (DOL)

A: Degree of Operating Leverage (DOL): Degree of Operating Leverage (DOL) is a ratio of leverage that…

Q: Explain the concept of triangular arbitrage and the scenario necessary for it to be plausible

A: Triangular arbitrage is a consequence when the currency exchange rate does not match up with other…

Q: What is NUBD’s degree of operating leverage?

A: Degree of operating leverage shows how operating income of the business will change as a, result of…

Q: Explain this statement: “Using leverage has both good and badeffects.”

A: Financial leverage is said to be made when company uses borrowed capital instead of own capital for…

Q: ?Which of the following statements about operating leverage is false

A: Operating leverage: Operating leverage can be defined as the measure used to identify the increase…

Q: Define operating leverage with examples and why it is potentially risky.?

A: Operating leverage is used to measure a company’s fixed costs as a percentage of its total costs. A…

Q: What is Basic Calculations of Financial Leverage?  Please provide example.

A: Financial Leverage:It represents that how a company uses its debt to acquire assets. It also shows…

Q: what is IPO underpricing? How do asymmetric information model explain this phenomena?Briefly explain

A: When an IPO( initial public offering )  is set at a price lower than its real market value. So, when…

Q: Explain this statement: Using financial leverage has both good and bad effects.

A: financial leverage is the process of borrowing capital to make an investment, with the assurance…

Q: Explain the effect of leverage on EPS and ROE and what is the break-even EBIT?

A: Leverage refers to the debt amount a company uses in order to finance its assets. EPS refers to…

Q: What is the impact of leverage on WACC?

A: The capital structure of a company is the best combination of numerous funding sources. Equity,…

Q: Define the term s financial leverage?

A: Financial leverage means buying the asset by taking the debt. The company always uses leverage…

Q: Explain the parameters or situations used to determine if the operating and financial leverages are…

A: Operating leverage is based on the cost structure of the company. It is the extent of fixed and…

Q: What is the meaning of operating leverage?

A: Leverage ratio: It overlooks the mixture of debt and equity which is required for analyzing the…

Q: How do you define leverage?

A: Solution:- Leverage means as follows under:-

Q: Identify three measures of the extend of leverage calculated by FCI.

A: Leverage:   Leverage measures overlook the mixture of debt and equity which is required for…

Q: What is operating leverage?

A:

Q: What is Linda's degree of operating leverage?

A: Operating Cost is the efficiency ratio. It calculates the portion of the contribution covered by…

Q: Why runaway gap (technical analysis) occur? Explain.

A: Introduction : The mentality underlying a runaway gap would be that dealers who missed the initial…

Q: What is operating leverage? Give three examples?

A: Operating leverage:

Q: what are the benefits/risks of financial leverage?

A: Financial leverage is a condition wherein a company raises funds through the issue of additional…

Q: HAT ARE THE TYPES OF LEVERAGE? HOW ARE THEY CALCULATED AND WHAT DO THEY IMPLY?

A: Leverage is the technique of risk evaluation in a business. There are three types of Leverage…

Q: What is meant by the term operating leverage?

A: Definition: Operating leverage: Operating leverage is an outcome of using fixed costs to obtain a…

Q: What is Nancy’s degree of operating leverage?

A: Formula used: Degree of operating leverage = contribution margin / Operating income