Given the following information, which of the following statements is most FALSE? Historical Yr Projected Yr Sales 185,000 220,000 EBIT 116,000 NI 60,000 140,000 75,190 O a. The degree of total leverage is 1.4153. O b. The degree of operating leverage is 1.0936. The degree of financial la 5004

Given the following information, which of the following statements is most FALSE? Historical Yr Projected Yr Sales 185,000 220,000 EBIT 116,000 NI 60,000 140,000 75,190 O a. The degree of total leverage is 1.4153. O b. The degree of operating leverage is 1.0936. The degree of financial la 5004

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter15: Capital Structure Decisions

Section: Chapter Questions

Problem 5MC: What happens to ROE for Firm U and Firm L if EBIT falls to $1,600? What happens if EBIT falls to...

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Question

Given the following information, which of the following statements is most FALSE?
Historical Yr Projected Yr
Sales
185,000
220,000
EBIT 116,000
140,000
NI
60,000
75,190
O a. The degree of total leverage is 1.4153.
Ob. The degree of operating leverage is 1.0936.
O c. The degree of financial leverage is 1.2236.
d. EPS would increase by the same percentage as NI.
Oe. The financial leverage was caused by the interest expense not staying proportional to Sales.

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