Financial leverage and EPS

8. Which of the following statements is CORRECT?

a. The debt ratio that maximizes EPS generally exceeds the debt ratio that maximizes share price.

b. Increasing financial leverage is one way to increase a firm's basic earning power (BEP).

c. Firms with lower fixed costs tend to have greater operating leverage.

d. If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

e. If a company were to issue debt and use the money to repurchase common stock, this action would have no impact on the company's return on assets. (Assume that the repurchase has no impact on the company's operating income.)