If a Firm Has Current Earnings Per Share of $2

question 103

Multiple Choice

If a firm has current earnings per share of $2 and a degree of financial leverage of 4, a 10% increase in sales would result in earnings per share of:

• A) $2.80
• B) $8
• C) $2.20
• D) cannot tell from this information

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Definitions:

Negative Thinking And Biases

Patterns of thought that involve pessimistic perceptions, expectations, or interpretations of oneself, others, and the world.

Challenge Automatic Thoughts

In cognitive therapy, this involves questioning and testing the reality of negative thoughts and assumptions.

Black-and-white Terms

Describing situations or thinking in absolute terms, without acknowledging the complexities or grey areas that may exist.

Automatic Thoughts

Numerous unpleasant thoughts that help to cause or maintain depression, anxiety, or other forms of psychological dysfunction.