A Firm Has an Increase in EPS of 5%,increase in EBIT

question 31

Multiple Choice

A firm has an increase in EPS of 5%,increase in EBIT of 3%,and a degree of total leverage of 2.What is the firm's percentage change in sales?

• A) 2.5%
• B) 1.5%
• C) 1.0%
• D) 4.2%
• E) Cannot be determined with the information provided.

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Definitions:

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership stake of the owners.

Revenues

The total income generated from normal business operations and other activities over a specific time period.

Expenses

The costs incurred in the process of generating revenue, including operational, administrative, and sales costs.

Debits

In accounting, an entry made on the left side of an account, increasing asset or expense accounts, or decreasing liability, equity, or revenue accounts.