Financial Leverage Causes a Firm's ____ to Change at a Rate

question 23

Multiple Choice

Financial leverage causes a firm's ____ to change at a rate greater than the change in ____.

• A) EBIT; EPS
• B) EPS; EBIT
• C) EBIT; sales
• D) sales; EBIT

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Definitions:

Stock Dividend

A form of dividend payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Retained Earnings

The portion of a company's profits not distributed as dividends to shareholders but retained for reinvestment in the business.

Par Value

Refers to the face value of a bond or the stock value stated in the corporate charter, establishing a minimum price per share for stocks issued.

Dividend Income

Income received from owning shares of a company that pays dividends, representing a portion of the company's profits distributed to shareholders.