A Change in EBIT Is Magnified into a Larger Change

question 64

Multiple Choice

A change in EBIT is magnified into a larger change in EPS. This means that financial leverage is using ____ as its fulcrum.

• A) short-term costs
• B) fixed costs
• C) variable costs
• D) retained earnings

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Definitions:

Imports

Imports are goods or services brought into one country from another for sale, usually regulated by the government with tariffs, quotas, or trade agreements.

Buyers

Individuals or entities that purchase goods or services for personal use, resale, or production.

Sellers

Individuals or entities that offer goods or services in exchange for compensation.

Tariff

A tax imposed on imported goods and services to restrict trade, often with the aim of protecting domestic industries.