Executive management at Ballard Books is very optimistic about the chain's ability to achieve significant increases in sales in each of the next five years. The company will most benefit if management creates a:
A) low leverage cost structure.
B) medium leverage cost structure.
C) high leverage cost structure.
D) no leverage cost structure.

Question

Quizplus · Accepted Answer

A high leverage cost structure would allow the company to finance growth through debt, which could lead to higher profits if sales increase as anticipated. However, this also comes with higher risks and potential financial distress if sales do not meet expectations. A no leverage cost structure would limit the company's ability to finance growth, while a low or medium leverage cost structure may not provide enough funding for significant sales growth.

Executive Management at Ballard Books Is Very Optimistic About the Chain's