The Effect of Financial Leverage Is Such That an Increase

question 19

True/False

The effect of financial leverage is such that an increase in a firm's earnings before interest and taxes (EBIT) results in a more than proportional increase in the firm's earnings per share (EPS), while a decrease in the firm's EBIT results in a less than proportional decrease in EPS.

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Definitions:

Myosin

A protein that, along with actin, plays a key role in muscle contraction by pulling actin filaments.

Lysosome

A membrane-bound cell organelle that contains digestive enzymes to break down waste materials and cellular debris.

Golgi Apparatus

A cell organelle involved in the modification, sorting, and packaging of proteins for secretion or for use within the cell.

Mitochondrion

An organelle found in large numbers in most cells, where it produces energy through respiration and regulates cellular metabolism.