The Less One Knows About How a Structure Came to Develop

question 24

True/False

The less one knows about how a structure came to develop in a distinctive way,the more likely one is to understand it.

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Definitions:

EPS

Earnings Per Share – a company's profit divided by the outstanding shares of its common stock, providing an indicator of the company's profitability.

Degree Of Total Leverage

A ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income due to changes in its capital structure.

Financial Leverage

The use of borrowed funds to increase an investment's potential return, which also increases the risk of loss.

Operating Leverage

A measure of how sensitive a company's operating income is to changes in its revenue, indicating the proportion of fixed versus variable costs.