". VdoTips: Financial Management Practice Set



Financial Management Practice Set

91. Which of the following is the expression for operating leverage?
(A) Contribution/EBIT.
(B) EBT/Contribution.
(C) Contribution/EAT.
(D) Contribution/Quantity.
92. Operating Leverage is the response of changes in ----
(A) EBIT to the changes in sales.
(B) EPS to the changes in EBIT.
(C) Production to the changes in sales.
(D) None of the above.
93. The use of preference share capital as against debt finance
(A) Reduces DFL.
(B) Increases DFL.
(C) Increases financial risk.
(D) Both a and
94. The Degree of Financial Leverage (DFL)
(A) Measures financial risk of the firm.
(B) Is zero at financial break even point.
(C) Increases as EBIT increases.
(D) Both a and
95. Which one of the following is not a source of long-term finance?
(A) Equity capital.
(B) Preference capital.
(C) Commercial paper.
(D) Term loan.