As you explored in your textbook, financial leverage refers to the amount of debt used in the capital structure of a business. The degree of financial leverage measures the effect of a change in the company$$s earnings per share $($EPS$)$ that occurs because of a percent change in the earnings before interest and taxes $($EBIT$).$

List some of the benefits and limitations of financial leverage relevant to profitability. Then, explain the factors a company should consider when deciding which type of leverage plan $($i$.$e$.,$ leveraged or conservative$)$ it should follow.