A Degree of Operating Leverage of 1

Multiple Choice

A degree of operating leverage of 1.5 times indicates that _____.

A) for every 1 percent change in EPS there will be a 1.5 percent change in sales
B) for every 1 percent change in interest there will be a 1.5 percent change in EBIT
C) for every 1 percent change in sales there will be a 1.5 percent change in EBIT
D) for every 1 percent change in EBIT there will be a 1.5 percent change in EPS
E) for every 1 percent change in sales there will be a 1.5 percent change in EPS