A 20% Increase in Sales Causes EPS to Rise from $4.00

question 93

Multiple Choice

A 20% increase in sales causes EPS to rise from $4.00 to $6.50.Assuming the firm has no debt,what is its degree of operating leverage (DOL) ?

• A) 1.00
• B) 1.50
• C) 1.57
• D) 3.13
• E) 2.25

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Definitions:

Corporate Ladder

The hierarchical structure within an organization, representing different levels of position and responsibility, which employees aim to ascend.

Higher-order Needs

Needs in Maslow's hierarchy that go beyond basic physiological and safety requirements, focusing on psychological and self-fulfillment desires.

Maslow's Needs Hierarchy

A theory in psychology proposed by Abraham Maslow, suggesting that individuals are motivated by a hierarchy of needs starting from the most basic physical needs to higher psychological needs.

Different Cultures

Variations in the social behaviors, practices, beliefs, and values among groups of people differentiated by ethnic, national, geographical, or social backgrounds.