Multiple Choice
The degree of leverage concept is designed to show how changes in sales affect earnings before interest and taxes (EBIT) and earnings per share (EPS) . If a 10 percent increase in sales causes EPS to increase from $1.00 to $1.50 and if the firm uses no debt, then what is its degree of operating leverage?
A) 0.5×
B) 1.5×
C) 2.0×
D) 5.0×
E) 7.5×
Correct Answer:
Verified
Correct Answer:
Verified
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