1441. Operating leverage arises because of __________.
A. Fixed cost of production *
B. Fixed interest cost
C. Variable cost
D. None of the above
1442. Financial leverage arises because of ________.
A. Fixed cost of production
B. Variable cost
C. Interest cost *
D. None of the above
1443. Operating leverage is calculated as ________.
A. Contribution /EBIT *
B. EBIT / PBT
C. EBIT / Interest
D. EBIT/ Tax
1444. Financial leverage is calculated as _________.
A. EBIT / Contribution
B. EBIT / PBT *
C. EBIT / Sales
D. EBIT / Variable cost
1445. Which combinations generally good for firms _________.
A. High OL, High FL
B. Low OL, Low FL
C. High OL, LOW FL *
D. None of these
1446. Combined leverage can be used to measure the relationship between _______.
A. EBIT and EPS
B. PAT and EPS
C. Sales and EPS *
D. Sales and EBIT
1447. FL is zero If ______.
A. EBIT = Interest
B. EBIT = Zero *
C. EBIT = Fixed cost
D. EBIT = Pref dividend
1448. Business risk can be measured by _________.
A. Financial leverage
B. Operating leverage *
C. Combined leverage
D. None of the above
1449. Financial leverage measures relationship between __________.
A. EBIT and PBT
B. EBIT and EPS *
C. Sales and PBT
D. Sales and EPS
1450. Use of preference share capital in capital structure _________.
A. Increase OL
B. Increase FL *
C. Decrease OL
D. Decrease FL