Question
The degree of financial leverage has which of the following characteristics? a. The DFL relates the change in EBIT to the change in sales. b.
The degree of financial leverage has which of the following characteristics?
a. | The DFL relates the change in EBIT to the change in sales. | |
b. | The closer the firm is operating to its financial breakeven point, the smaller the DFL. | |
c. | For a particular firm, the DFL is not a fixed numberits value depends on the level of operations and the fixed financial costs associated with those operations. | |
d. | If a firm has common stock, it is impossible for its DFL to equal 1.0. | |
e. | Other things held constant, if a firm has fixed financial costs, such as interest, a change in EBIT will result in an equivalent change in EPS. |
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