The Steeper the Slope of the EBIT-EPS Capital Structure Line

question 9

True/False

The steeper the slope of the EBIT-EPS capital structure line, the lower is the financial risk.

---

Definitions:

Sales On Account

represent transactions where goods or services are sold with the agreement that payment will be made at a later date.

Cost Of Goods Sold

The total cost of manufacturing or acquiring the products sold by a company during a specific period, excluding indirect costs.

Acid-Test Ratio

A liquidity metric that measures a company's ability to pay off its current liabilities without relying on the sale of inventory.

Balance Sheet

A statement detailing an organization's assets, liabilities, and owners' equity on a certain date.