If the degree of accounting leverage is 1.3 for a firm, then a 10 percent increase in revenue should drive a
A) 13% increase in pretax operating cash flows.
B) 13% increase in EBIT.
C) 30% increase in EBIT.
D) none of the above.
Answer: B
Finance
- There are those that believe that the analysis of financial statements has limitations. Which of the statements below would qualify as a limitation of financial statement analysis?
- Which of the following is not a method of "benchmarking"?
- Return on Equity: In the latest year, Photon, Inc. reported $276,000 in net income. The firm maintains a debt ratio of 30% and has total assets of $3,000,000. What is Photon's return on equity? (Round off to the nearest 0.1%)
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- DuPont equation: Andrade Corp has debt of $2,834,950, total assets of $5,178,235, sales of $8,234,121, and net income of $812,355. What is the firm's return on equity?
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