If a Firm Utilizes Debt Financing, a Decrease in Earnings

question 12

True/False

If a firm utilizes debt financing, a decrease in earnings before interest and taxes (EBIT) will result in a more than proportionate decrease in earnings per share.

---

Definitions:

Wintergreen

A plant or flavor often characterized by a refreshing, minty taste, derived from certain plants or synthetically produced.

Odors

Smells or scents, which are sensory stimuli detected by the olfactory system.

Olfactory Receptor

A type of sensory cell located in the nasal cavity that is responsible for detecting odors and initiating the sense of smell.

Kinesthesia

The faculty for recognizing the position, weight, or movement in the body's muscles, tendons, and joints.