If a Firm's EBIT Changes by 20% and It Has

question 166

Multiple Choice

If a firm's EBIT changes by 20% and it has a degree of financial leverage (DFL) of 2.0, what is the expected change in earnings per share (EPS) ?

• A)20%
• B)40%
• C)50%
• D)60%

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Definitions:

Pearsons Correlation

A measure of the linear correlation between two variables X and Y, giving a value between +1 and -1 inclusive, where 1 is total positive linear correlation, 0 is no linear correlation, and −1 is total negative linear correlation.

Ranks Of Data

The order of data points based on their value, usually from smallest to largest, used in non-parametric statistical analyses.

Pearson's Correlation

A measure of the linear correlation between two variables, ranging from -1 to +1.

Ranks Of Data

The ordering of data points based on their size or magnitude, usually from the smallest to the largest.