The Basic Shortcoming of the EBIT-EPS Approach to Capital Structure

question 9

Multiple Choice

The basic shortcoming of the EBIT-EPS approach to capital structure is

• A) its disregard for the firm's dividend policy.
• B) that the optimal capital structure is difficult to compute.
• C) its disregard for the presence of preferred stock in the capital structure.
• D) that it concentrates on the maximization of EPS rather than the maximization of owner's wealth.

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Definitions:

Crosstab Row

The horizontal part of a crosstabulation table that categorizes data for comparison across different variables.

Query Design Grid

A tool within database software that provides a graphical interface for constructing queries by arranging tables, fields, and criteria.

Row Heading

The labels located at the beginning of rows in spreadsheet or table software, often used for identification or reference purposes.

Crosstab Query

A query type that aggregates data based on two or more fields and displays it in a tabular form, often used to create matrix reports.