1. it is not possible for a firm's sales to grow faster than its sustainable growth rate. T or F

2. Which of theh following is a source of operating leverage? A. Depreciation, B. Property Taxes, C. Interest Expense, D. A and B

3. For a firm with no fixed costs, variability in sales is the only source of variability in earnings.

4. Which of the following changes would increase a firm's sustainable growth rate? A. increase in profit margin, B. increase in asset turnover, C. decrease in financial leverage, D. A and B

5. The variability in a firm's earning (EAT) is affected by A. Variability in sales, B. Level of Operating leverage, C. Level of financial leverage. D. All of the above.

6. Depreciation is an example of a source of financial leverage. T or F

7. A firm with a high level of operating leverage must also have a high level of financial leverage.