Provide a Definition for Credit Cost Curve

question 155

Essay

Provide a definition for credit cost curve.

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Definitions:

DFL

Degree of Financial Leverage; a ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income, based on its capital structure.

EBIT

EBIT stands for Earnings Before Interest and Taxes, a measure of a firm’s profitability that excludes interest and income tax expenses.

EPS

Earnings Per Share, a company's profit divided by the number of its common shares outstanding, indicating the company's profitability.

EBIT-EPS Line

A graphical representation showing the impact of financial leverage on a company's earnings per share at various levels of earnings before interest and taxes.