Bowden Building Supply Reported an EBIT of $5,531,500, Has a 35

Multiple Choice

Bowden Building Supply reported an EBIT of $5,531,500, has a 35% tax rate, pays interest of $480,000 on $9,290,000 of debt and $0.60 to each of its 500,000 common shares outstanding. What is the company experiencing?

A) No presence of financial leverage as indicated by a ratio of 0.6.
B) No presence of financial leverage as indicated by a ratio of 1.0.
C) No presence of financial leverage as indicated by a ratio of 1.3.
D) The presence of financial leverage as indicated by a ratio of 1.1.
E) The presence of financial leverage as indicated by a ratio of 1.8.