The degree of combined leverage shows us to what degree a percentage change in sales will cause a percentage change in:
A) earnings before interest and taxes
B) pre-tax earnings
C) earnings per share
D) gross profit

Question

Quizplus · Accepted Answer

The degree of combined leverage shows the effect of a percentage change in sales on the percentage change in earnings per share (EPS). It combines the effects of operating leverage (which affects earnings before interest and taxes) and financial leverage (which affects earnings after interest but before taxes) to show their impact on EPS.

The Degree of Combined Leverage Shows Us to What Degree