For a Levered Firm

question 59

Multiple Choice

For a levered firm,

• A) As earnings before interest and taxes (EBIT) increases, the earnings per share (EPS) increases by the same percent
• B) As EBIT increases, the EPS increases by a larger percent
• C) As EBIT increases, the EPS decreases
• D) None of the above

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Definitions:

EFT Deposit

An electronic funds transfer directly into a bank account, considered a safe and efficient way to transfer money.

Bank Correction

Adjustments made by a bank to rectify any discrepancies found in an account balance.

Cash Drawer

A compartment within a cash register where the cash from transactions is kept.

Cash Receipts

Money received by a business, often recorded in the period it is received.