1. Which of the following leverages considers the effect on earnings per share (EPS) of the changing operating income (EBIT)??
a. ?Financial leverage
b. ?Combined leverage
c. ?Operating leverage
d. ?Total leverage
e. ?Contribution leverage
2. If a firm does not meet its forecasted sales level, then leverage will result in a magnified loss in income compared to what is expected because:?
a. ?inventories will be built very slowly.
b. ?sales operations will be reduced drastically.
c. ?additional external funds needed will be reduced.
d. ?production facilities will be expanded greatly.
e. ?retained earnings will increase rapidly.