Chapter 10

Chapter 10 - leverage. * Describe the impact of leverage on...

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Chapter 10: Leverage * Resume Tips * Mind Map In the physical sciences, “leverage”  refers to the ability to  magnify effort In finance, we borrow this term and  use it in a similar way to describe the  impact of  fixed costs . Leverage : the magnification of  operating or financial results from the  use of  fixed  costs. Two “Flavors” of Leverage :   1) Operating  2) Financial  * Mind Map Learning Objectives:
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* Develop an understanding of what  creates operating and financial 
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Unformatted text preview: leverage. * Describe the impact of leverage on operating profits and net income/EPS . * Distinguish between operating leverage and financial leverage . * Measure the amount of leverage inherent in a firms operations. * Predict the impact of changes in sales or operating profits . * Mind Map Key Words/Concepts: * Financial Leverage * Operating Leverage * DOL, DFL, DCL * Fixed Cost * Break-Even * Contribution Margin...
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Chapter 10 - leverage. * Describe the impact of leverage on...

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