A firm's degree of financial leverage is 1.5 and the degree of operating leverage is 2.0. What is their degree of total leverage?
A)9.0
B)3.0
C)4.5
D)None of the above

Name: A firm's degree of financial leverage is 1.5 and the degree of operating leverage is 2.0. What is their degree of total leverage? A)9.0 B)3.0 C)4.5 D)None of the above
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Question

Quizplus · Accepted Answer

The degree of total leverage is calculated by multiplying the degree of financial leverage (1.5) by the degree of operating leverage (2.0), which equals 3.0.

A Firm's Degree of Financial Leverage Is 1