Pearl Ltd. Company purchased a van for Rs. 12,000 making a down payment of Rs.5,000 cash and signing an Rs7, 000 note payable in 60 days. As a result of this transaction:

a. Total assets will increase by Rs. 12,000 b. Total liabilities will increase by Rs. 7,000 c. This transactions will not have immediate effect on owner’s equity in the business d. From the point of view of short-term creditor, this transaction will make business more liquid Choose the correct option:

The combined leverage

a. Is the summation of the degree of operating leverage and the financial leverage b. Measures total risk of the firm. c. Is the difference between the degree of operating leverage and financial leverage d. Indicates the effect that changes in sales will have on earning per share Choose the correct option