When Comparing Levered Vs

question 84

Multiple Choice

When comparing levered vs. unlevered capital structures,leverage works to increase EPS for high levels of EBIT because:

• A) interest payments on the debt vary with EBIT levels.
• B) interest payments on the debt stay fixed, leaving less income to be distributed over less shares.
• C) interest payments on the debt stay fixed, leaving more income to be distributed over less shares.
• D) interest payments on the debt stay fixed, leaving less income to be distributed over more shares.
• E) interest payments on the debt stay fixed, leaving more income to be distributed over more shares.

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Definitions:

Accounts Payable

Accounts payable are liabilities or amounts owed by a company to its creditors for goods and services purchased on credit.

Accounts Receivable

Financial obligations of customers towards a business for provided goods or services, yet to be remunerated.

Office Supplies

Consumable items used in an office environment for day-to-day operations, such as paper, pens, and toner.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company’s balance sheet.