If the DFL equals one, then ____.
A)ROCE equals ROE
B)additional debt does not affect EPS
C)there is no business risk
D)financial risk is maximized

Name: If the DFL equals one, then ____. A)ROCE equals ROE B)additional debt does not affect EPS C)there is no business risk D)financial risk is maximized
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Question

Quizplus · Accepted Answer

A DFL of one means that financial risk does not impact ROE, so ROCE would equal ROE regardless of financial leverage. This does not affect EPS or business risk. Therefore, option A is correct.

If the DFL Equals One, Then ____