The higher the degree of financial leverage (DFL), the greater the leverage a plan has, and the steeper its slope when plotted on EBIT-EPS axes.

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This statement is true. The degree of financial leverage (DFL) measures the percentage change in earnings per share (EPS) resulting from a percentage change in earnings before interest and taxes (EBIT). A higher DFL indicates that a greater portion of the earnings is contributed by debt financing, which also means that a company has higher financial risk. When plotted on EBIT-EPS axes, a higher DFL will result in a steeper slope, indicating that small changes in EBIT will result in larger changes in EPS.

The Higher the Degree of Financial Leverage (DFL), the Greater