is possible that two firms could have identical financial and operating leverage, yet have different degrees of risk as measured by the variability of EPS.

Question

Quizplus · Accepted Answer

Two firms could have identical financial and operating leverage, but their degree of risk could differ due to factors such as differences in their business models, market conditions, and management decisions. The variability of EPS is affected by a variety of factors beyond leverage ratios.

Is Possible That Two Firms Could Have Identical Financial and Operating