Which of the Following If the Correct Mathematical Expression of the Degree

question 6

Multiple Choice

Which of the following if the correct mathematical expression of the degree of financial leverage (DFL) ?

• A) DFL = %ÄEBT \(\div\) %ÄEPS
• B) DFL = %ÄEBIT \(\div\) %ÄEPS
• C) DFL = %ÄEPS \(\div\) %ÄEBIT
• D) DFL = %ÄEPS \(\div\) %ÄEBT

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Definitions:

Profit Margin

Profit margin is a financial ratio that measures the percentage of revenue remaining after all expenses have been deducted. It is a key indicator of a company's financial health and pricing strategy.

Return on Investment

A financial metric that calculates the profitability of an investment by dividing the net profit by the initial cost.

Support Department Allocations

The process of distributing overhead costs from support departments to producing departments based on predetermined criteria.

Operating Income

is the profit realized from a business's operations after deducting operating expenses such as wages and depreciation, but before interest and taxes.