If the Business Cycle Is Just Beginning Its Upswing, Which

Multiple Choice

If the business cycle is just beginning its upswing, which firm would you anticipate would be likely to show the best growth in EPS over the next year? Firm A has high combined leverage and Firm B has low combined leverage.

A) Firm A
B) Firm B
C) Indifferent between the two
D) It depends on how much financial leverage each firm has