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Assume That a Firm's Degree of Financial Leverage (DFL) Is

Question 67

Multiple Choice

Assume that a firm's degree of financial leverage (DFL) is 1.2. If sales this year increase by 20 percent, the firm expects a 60 percent increase in earnings per share (EPS) . What is the firm's degree of operating leverage of the firm?


A) 2.5×
B) 3.0×
C) 1.8×
D) 0.4×
E) 3.6×

Correct Answer:

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