The degree of financial leverage (DFL) is defined as the percentage change in _____ that results from a given percentage change in earnings before interest and taxes (EBIT).
A)sales
B)net operating income (NOI)
C)fixed financial costs
D)net income
E)earnings per share (EPS)

Question

The degree of financial leverage (DFL) is defined as the percentage change in _____ that results from a given percentage change in earnings before interest and taxes (EBIT). 
A)sales
B)net operating income (NOI)
C)fixed financial costs
D)net income
E)earnings per share (EPS)

Quizplus · Accepted Answer

The degree of financial leverage (DFL) measures the sensitivity of a company's earnings per share (EPS) to changes in its earnings before interest and taxes (EBIT).

The Degree of Financial Leverage (DFL) Is Defined as the Percentage