Which of the Following Is True of the Degree of Total

question 11

Multiple Choice

Which of the following is true of the degree of total leverage (DTL) ?

• A) It is the percentage change in EPS that results from a given percentage change in EBIT.
• B) It is the level of EBIT at which EPS equals zero.
• C) It is the percentage change in NOI (or EBIT) associated with a given percentage change in sales.
• D) It represents the level of production and sales at which net operating income is zero.
• E) It is the percentage change in EPS that results from a 1 percent change in sales.

---

Definitions:

Solution

A means of solving a problem or dealing with a difficult situation, or a homogeneous mixture of two or more substances.

Mental Images

Mental representations that stand for objects or events and have a picture-like quality.

Physical Objects

Items or things that occupy space and have mass, perceptible through the senses, especially the sense of touch.

Phoneme

The smallest unit of sound in a language that can distinguish meaning between words.