Suppose That a Firm Has a Degree of Financial Leverage

Multiple Choice

Suppose that a firm has a degree of financial leverage (DFL) that is greater than 1.0; that is, DFL > 1. If the firm's sales decrease by 1 percent, its ______ will decrease by more than 1 percent. 

A) earnings per share (EPS)
B) net operating income (NOI)
C) interest expense
D) variable costs
E) fixed financing costs