Total leverage can be defined as the potential use of fixed costs, both operating and financial, to magnify the effect of changes in sales on the firm's earnings per share.

Question

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Total leverage refers to the use of both operating and financial fixed costs to increase the impact of sales changes on a company's earnings per share. This means that a company can maximize its earnings by effectively managing both types of fixed costs to create leverage.

Total Leverage Can Be Defined as the Potential Use of Fixed