Question Details

Operating leverage 





1.	Some employees prefer restricted stock over options because they receive actual shares of stock.


	2.	Operating leverage refers to the existence of fixed operating costs.

	3.	A disadvantage of interest expense over dividends is its tax deductibility.

	4.	If financial leverage is used, a rise in EBIT will cause a lessor rise in net income.

	5.	In general, new firms, growing firms, and firms perceived as growth firms will have a relatively low percentage of earnings retained.




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