The "Degree of Leverage" Concept Is Designed to Show How

question 20

Multiple Choice

The "degree of leverage" concept is designed to show how changes in sales will affect EBIT and EPS.If a 30.00% increase in sales causes EPS to increase from $1.00 to $1.50,and if the firm uses no debt,then what is its degree of operating leverage? Do not round intermediate calculations.

• A) 1.2500
• B) 1.5667
• C) 2.0333
• D) 1.6667
• E) 1.3000

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Definitions:

Ex Officio Seat

A position held by virtue of an office or position, granting the holder membership and possibly voting rights in a body or organization.

Board

A group of individuals elected or appointed to oversee the activities and governance of an organization, making key decisions and setting policies.

Virtue

The quality of being morally good or righteous.

Organizational Model

A schematic representation of how an organization structures its operations, resources, and communication pathways.