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

question 67

Multiple Choice

The "degree of leverage" concept is designed to show how changes in sales will affect EBIT and EPS.If a 10 percent increase in sales causes EPS to increase from R1.00 to R1.50, and if the firm uses no debt, then what is its degree of operating leverage?

• A) 3.6
• B) 4.2
• C) 4.7
• D) 5.0
• E) 5.5

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