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Management · Q211

Financial Management

Graduate and Post Graduate · Management · question 211

Q211

Degree of total leverage can be applied in measuring change in _________.

A.
EBIT to a percentage change in quantity
B.
EPS to a percentage change in EBIT
C.
EPS to a percentage change in quantity
Answer
D.
Quantity to a percentage change in EBIT

Answer: Option C

Solution

Answer: Option C
Solution:
Degree of total leverage can be applied in measuring change in EPS to a percentage change in quantity. Degree of total leverage is the ratio of percentage change in earnings per share to percentage change in sales revenue.