8. Analyzing riskiness using a firm's degree of leverage

Select the degree of leverage that completes the following sentence.

The ____________ is the percentage change in EPS that results from a given percentage change in EBIT.

Expert Analysts Resources (EAR) has provided you with the following information about three companies you are currently evaluating:

	Galaxy Corp.	Western Gas Co.	General Products Co.
Degree of Operating Leverage (DOL)	4.0	2.0	5.0
Degree of Financial Leverage (DFL)	3.3	5.0	2.1

According to this information, which company would be considered the riskiest?

Galaxy Corp.

General Products Co.

Western Gas Co.