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1. Efficiency is obtaining the highest possible return with the minimum use of resources. Effectiveness is accomplishing a specific task or reaching a goal. This two can compare because there are times where some people can use less resources to obtain the same goal.2.Accounting profit is typically shown at the bottom of an income statement. Entrepreneurial profit differs from accounting profit because it is based on the economic concept of opportunity costs.3. Profitability is how efficiently the business assets are being used in generating profit. We determine profitability by using the net return on assets ratio.4. The earning power of a company can be defined as a product of two factors 1 the companys ability to generate income on the amount of revenue it receives, which is also known as net profit margin and 2 its ability to maximize sales revenue from proper asset employment.5. Financial leverage and bankruptcy are linked by liabilities. Financial leverage is financing a company with other peoples money. The greater the liabilities the greater your financial leverage. Bankruptcy happens when a business  liability exceeds the assets.

6. Chapter 11 bankruptcy happens when a business tries to get court protection while coming up with a plan to repay its debt to its creditors chapter 7 bankruptcy requires liquidation of all assets in order to repay its debt to its creditors7. The break even quantity is a ratio of a businesss fixed cost to its price per unit minus its variable cost which is its contribution margin.8. Some factors that affect variable cost depends on the firm. For a manufacturing firm variable cost are raw materials, production labor, and cost of running production machinery. For a wholesale or retail firm variable cost are cost of goods sold, from them income statement. Other factors could include freight, insurance of items in transit, and the price paid for Merchandise that will later be sold.

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Financial Leverage And Business Assets. (June 1, 2021). Retrieved from https://www.freeessays.education/financial-leverage-and-business-assets-essay/