In a leveraged firm, the variation in ROE and EPS will always be less than the variation in the firm's EBIT because of the lower cost of capital.

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In a leveraged firm, the variation in ROE (Return on Equity) and EPS (Earnings Per Share) will typically be greater than the variation in the firm's EBIT (Earnings Before Interest and Taxes) due to the presence of fixed financial costs (interest on debt), which amplify the effects of changes in EBIT on the firm's equity returns.

In a Leveraged Firm, the Variation in ROE and EPS