{"id":51290,"date":"2024-04-15T23:22:41","date_gmt":"2024-04-15T23:22:41","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=51290"},"modified":"2024-04-15T23:22:41","modified_gmt":"2024-04-15T23:22:41","slug":"combined-leverage-is-obtained-from-ol-and-fl-by-their","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/combined-leverage-is-obtained-from-ol-and-fl-by-their\/","title":{"rendered":"Combined Leverage is obtained from OL and FL by their:"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Addition&#8221; option2=&#8221;Subtraction&#8221; option3=&#8221;Multiplication&#8221; option4=&#8221;Any of these&#8221; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is: C. Multiplication<\/p>\n<p>Combined leverage is a measure of the combined effect of operating leverage and financial leverage on the earnings per share (EPS) of a company. It is calculated by multiplying the operating leverage (OL) and the financial leverage (FL).<\/p>\n<p>Operating leverage is a measure of how sensitive a company&#8217;s earnings are to changes in its sales. A company with high operating leverage has a high proportion of fixed costs in its cost structure. This means that a small change in sales can lead to a large change in earnings.<\/p>\n<p>Financial leverage is a measure of how sensitive a company&#8217;s earnings are to changes in its interest expense. A company with high financial leverage has a high proportion of debt in its capital structure. This means that a small change in interest rates can lead to a large change in earnings.<\/p>\n<p>Combined leverage is important because it can help investors to understand the risk of investing in a company. A company with high combined leverage is more risky than a company with low combined leverage. This is because a small change in sales or interest rates can lead to a large change in earnings.<\/p>\n<p>Here is a brief explanation of each option:<\/p>\n<p>A. Addition: This is not the correct answer because combined leverage is not obtained from OL and FL by their addition.<\/p>\n<p>B. Subtraction: This is not the correct answer because combined leverage is not obtained from OL and FL by their subtraction.<\/p>\n<p>C. Multiplication: This is the correct answer because combined leverage is obtained from OL and FL by their multiplication.<\/p>\n<p>D. Any of these: This is not the correct answer because combined leverage is not obtained from OL and FL by any of these.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Addition&#8221; option2=&#8221;Subtraction&#8221; option3=&#8221;Multiplication&#8221; option4=&#8221;Any of these&#8221; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-51290","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Combined Leverage is obtained from OL and FL by their:<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/combined-leverage-is-obtained-from-ol-and-fl-by-their\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Combined Leverage is obtained from OL and FL by their:\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Addition&#8221; 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