If the Business Cycle Were Just Beginning Its Upswing, Which

question 7

Multiple Choice

If the business cycle were just beginning its upswing, which firm would you anticipate would be likely to show the best growth in EPS over the next year? Firm A has high combined leverage and Firm B has low combined leverage.

• A) Firm A
• B) Firm B
• C) Indifferent between the two
• D) It depends on how much financial leverage each firm has.

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