The Major Shortcoming of the EBIT-EPS Approach to Capital Structure

question 146

Multiple Choice

The major shortcoming of the EBIT-EPS approach to capital structure is that ________.

• A) the technique does not promote the maximization of shareholder wealth
• B) the technique does not consider the cost of capital
• C) the technique only considers leverage-related risk
• D) the technique does not maximize earnings per share

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Definitions:

Attachment Styles

Patterns of attachment behavior shown by individuals in close relationships, shaped by early interactions with caregivers.

Infant

A very young child, especially one newly or recently born, typically considered to be in the first year of life.

Disorganized-Disoriented Attachment

A pattern of behavior in infants characterized by a lack of a coherent style or strategy for dealing with separation anxiety, indicating difficulties in the attachment process.

Attachment

An affectional bond characterized by seeking closeness with another and distress upon separation.