The Degree of Financial Leverage Is Concerned with the Relationship

question 39

Multiple Choice

The degree of financial leverage is concerned with the relationship between

• A) changes in volume and changes in EPS.
• B) changes in volume and changes in EBIT.
• C) changes in EBIT and changes in EPS.
• D) changes in EBIT and changes in operating income.

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Definitions:

Tax Consequences

The effects that financial or legal decisions have on one's taxes owed to the government.

Bankruptcy Code

The set of laws codified under Title 11 of the United States Code, governing bankruptcy proceedings in the U.S.

Qualified Pension Plan

A retirement plan that meets the requirements established by the IRS, offering tax advantages to both employers and employees.

Social Security

A government program that provides monetary assistance to people with an inadequate or no income, especially the elderly, disabled, and families with dependent children.