IET 414 Exam 2 || with Accurate Answers 100%.
What is operating leverage? correct answers Comparing a company's fixed VS variable costs
What does a company with high operating leverage look like? correct answers A business that
generates sales with a high gross margin and low variable costs
True or False
Operating Leverage is used to calculate a company's break-even point. correct answers True.
This helps businesses set appropriate selling prices to cover all costs to help generate a profit.
What is break-even point? correct answers The point where total revenue equal total expenses
Why do businesses hold cash? correct answers Transaction motives (Payment towards planned
expenses) Supplies, payrolls, taxes
Compensation motives (Compensate a bank for services)
Precautionary motives (For emergency purposes) Very common for seasonal industries
Float correct answers Difference between a firms recorded amount and the amount credited to a
firm by the bank.
What are the different types of float? correct answers Mail float & Clearing float
Clearing float is... correct answers The amount of time it takes for a check to clear once a
payment is made
Typical ratios used for accounts receivable collection include correct answers Turnover
Turnover = correct answers Credit sales / Average Receivable balance
What are inventory carrying costs? correct answers Cost of warehouse space, Insurance
premiums, Material handling expenses
What are some benefits of having a level production plan correct answers Maximum efficiency
of manpower & machine use - Much cheaper.
What is Dun and Bradstreet? correct answers Database that produces business information
analysis tools
How does Dun and Bradstreet help companies? correct answers Offers data analytics to help
businesses make decisions based on their data
What is operating leverage? correct answers Comparing a company's fixed VS variable costs
What does a company with high operating leverage look like? correct answers A business that
generates sales with a high gross margin and low variable costs
True or False
Operating Leverage is used to calculate a company's break-even point. correct answers True.
This helps businesses set appropriate selling prices to cover all costs to help generate a profit.
What is break-even point? correct answers The point where total revenue equal total expenses
Why do businesses hold cash? correct answers Transaction motives (Payment towards planned
expenses) Supplies, payrolls, taxes
Compensation motives (Compensate a bank for services)
Precautionary motives (For emergency purposes) Very common for seasonal industries
Float correct answers Difference between a firms recorded amount and the amount credited to a
firm by the bank.
What are the different types of float? correct answers Mail float & Clearing float
Clearing float is... correct answers The amount of time it takes for a check to clear once a
payment is made
Typical ratios used for accounts receivable collection include correct answers Turnover
Turnover = correct answers Credit sales / Average Receivable balance
What are inventory carrying costs? correct answers Cost of warehouse space, Insurance
premiums, Material handling expenses
What are some benefits of having a level production plan correct answers Maximum efficiency
of manpower & machine use - Much cheaper.
What is Dun and Bradstreet? correct answers Database that produces business information
analysis tools
How does Dun and Bradstreet help companies? correct answers Offers data analytics to help
businesses make decisions based on their data
