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

question 53

Multiple Choice

The "degree of leverage" concept is designed to show how changes in sales will affect EBIT and EPS. If a 10% 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?

• A) 5.0000
• B) 5.2500
• C) 4.7500
• D) 4.5125
• E) 4.2869

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Definitions:

Hallucinations

Perceptions in the absence of external stimulus that have qualities of real perception; they are vivid, substantial, and located in external objective space.

Delusions

False belief held with strong conviction despite superior evidence to the contrary, often found in psychiatric disorders.

Mental Confusion

A state characterized by disorientation regarding time, place, or person, affecting cognitive processes and decision-making.

Antianxiety Drugs

Medications designed to relieve anxiety by altering the chemical balance in the brain, often used as part of a treatment plan for anxiety disorders.