Answer for the above question is False.
Reason -
Decline in sales result in low profit for the company at the same time increase in financial leverage means company is buying assets more through debt.
In the above scenario if the assets bought through debts are giving return more that the interest rates to manage those borrowings then there is not decline in loss in such case.
Lower profit margin could be through lower sales but increase in financial leverage can not be the reason to low the profit margin.
Other things held constant, a decline in sales accompanied by an increase in financial leverage must...
A major contribution of the Miller model is that it demonstrates, other things held constant, that: a) personal taxes increase the value of using corporate debt. b) personal taxes lower the value of using corporate debt. c) personal taxes have no effect on the value of using corporate debt. d) financial distress and agency costs reduce the value of using corporate debt. e) debt costs increase with financial leverage Pl elaborate in at least 100 words. Thank you
True or false and why? 1. Other things held constant, a decrease in a firm’s marginal tax rate would lower the cost of debt when calculate its WACC. 2. The component costs of capital are market-determined variables in the sense that they are based on investors’ expected returns.
8. Other things held constant, which of the following actions would increase the amount of cash on a company's balance sheet? a. The company increases its days sales outstanding. b. The company increases its inventory turnover rate. c. The company increases its expense. d. The company sees a decrease in accounts payable.
Which of the following statements is correct? Group of answer choices Other things held constant, the "liquidity preference theory" would generally lead to an upward sloping yield curve. Other things held constant, the yield curve under "normal" conditions would be horizontal (i.e., flat). Other things held constant, a downward sloping yield curve would suggest that investors expect interest rates to increase in the future. Other things held constant, the "market segmentation theory" would generally lead to an upward sloping yield...
20. Other things held constant, the greater the price of a good: the lower the consumer surplus.
Other things held constant, investment in physical capital will increase: labor productivity. national income. wages. all of the above
All other things being equal, an increase in the interest rate that the company must pay on its long term debt will have an impact on which of the following ratios? a) Return on equity (ROE). V Net Income Alorage SE. b) Return on total assets (ROA) NI + Interest Expense xl- Tax Rate Net profit margin percentage- Average d) a) and b). Total Assets / Net Incomev a) and c). Net Sales
All other things held constant, how will an increase in selling price affect the break-even point measured in units? Explain your answer (you may use an example, and you may even use a diagram if you want.).
An increase in wages, other things constant, would shift the short run aggregate supply curve upward. True or False, Explain your answer
An increase in the selling price per unit will decrease an organization's operating leverage, assuming sales unit volume doesn't change and there are no other changes in its cost structure. True or False True False