Your Firm's EPS Last Year Was $1

question 3

Multiple Choice

Your firm's EPS last year was $1.00. You expect sales to increase by 15% during the coming year. If your firm has a degree of operating leverage equal to 1.25 and a degree of financial leverage equal to 3.50, then what is its expected EPS?

• A) $1.66
• B) $1.83
• C) $1.92
• D) $1.74
• E) $1.57

---

Definitions:

Quality-oriented Process

An approach focusing on maintaining high standards in production or service delivery to satisfy customer needs.

Perishable Services

Services that cannot be stored for future use and must be consumed at the time of production, like live entertainment or airline flights.

Empowerment

The process of increasing the degree of autonomy and self-determination in people or communities to enable them to represent their interests in a responsible and self-determined way.

Variability

Refers to the degree of inconsistency or difference in a set of elements or a process outcome, often measured to assess quality control or performance over time.