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The "Degree of Leverage" Concept Is Designed to Show How

Question 20

Multiple Choice

The "degree of leverage" concept is designed to show how changes in sales will affect EBIT and EPS.If a 30.00% 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? Do not round intermediate calculations.


A) 1.2500
B) 1.5667
C) 2.0333
D) 1.6667
E) 1.3000

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