1) Financial Leverage reflects the amount of debt used in the capital structure of the firm

Select one:

True

False

2) The Degree of Financial Leverage equals the percentage change in EPS (Earnings Per Share) divided by the Percent Change in EBIT (Earnings before Interest and Taxes).

Select one:

True

False

3) Debt is beneficial and recommended for firms in industries that offer a degree of stability, that are in a positive stage of growth, and are operating in favorable economic conditions

Select one:

True

False

4) Combining operating and financial leverage does not allow firms to maximize returns

Select one:

True

False

5) The Degree of Combined Leverage (DCL) uses the entire income statement and shows the impact of change in sales or volume on bottom-line earnings per share.

Select one:

True

False