In 2015, a company had a total debt of $7 million. In 2016, the debt increased to $9 million. The change in earnings per share (EPS) of the company will be a direct result of change in its:
A) level of operations.
B) net operating income.
C) coefficient of variation.
D) capital structure
E) standard deviation.

Question

Quizplus · Accepted Answer

The change in EPS is directly affected by the change in capital structure, which is reflected in the increase in debt from $7 million to $9 million. A higher level of debt can increase financial leverage, which can increase the company's risk and volatility, and therefore impact its EPS. The other options are not directly related to the change in debt.

In 2015, a Company Had a Total Debt of $7