According to MM, an Increase in Expected Earnings Per Share

question 96

Multiple Choice

According to MM, an increase in expected earnings per share can leave the share price unchanged if the:

• A) firm's operating risk decreases.
• B) number of shares is decreased.
• C) required return on equity increases.
• D)firm has no financial leverage.

---

Definitions:

Manufactured Quantity

Manufactured quantity refers to the total number of units produced by a company during a specified period.

Absorption Costing

A financial recording technique that encompasses all production expenses, such as raw materials, direct labor, and variable as well as fixed overheads, into the pricing of a product.

Operating Income

Profit generated from core business operations, excluding expenses such as taxes and interest.

Absorption Costing

A bookkeeping approach that incorporates all expenses related to production, including direct materials, direct workforce, and variable along with fixed overhead costs, into the product's cost.