Which of the Following Statements Concerning the Degree of Total

question 10

Multiple Choice

Which of the following statements concerning the degree of total leverage (DTL) is correct?

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

---

Definitions:

Increase Assets

An augmentation in the total value or amount of economic resources owned or controlled by an entity.

Increase Liabilities

An action that results in a rise in the obligations or debts of a company, affecting the company's financial position.

Increase Owner's Equity

An action or event that enhances the net worth of a business as reflected in capital or owner's investment.

Decrease Assets

A reduction in the total value or amount of economic resources owned or controlled by an entity.