A Firm Has EBIT of $3

question 175

Multiple Choice

A firm has EBIT of $3.6M and debt of $15M on which it pays 8% interest. What is its Degree of Financial Leverage (DFL) ?

• A)1.0
• B)1.4
• C)1.5
• D)1.6

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Definitions:

Butan-2-ol

An alcohol with the chemical formula C4H10O, characterized by having its hydroxyl group (-OH) on the second carbon of a four-carbon chain.

Sulfuric Acid

A highly corrosive strong mineral acid with the molecular formula H2SO4, widely used in industry.

Sulfonium Salt

A type of ionic compound that contains a positively charged sulfonium ion (a sulfur atom covalently bonded to three organic groups) and a counter anion.

Mechanistic Path

The sequence of elementary steps that lead to the formation of products from reactants, delineating the specifics of a chemical reaction.