If a firm increases its use of financial leverage,then what would we generally expect for the effect of that increased leverage to have on an EPS that is already very low?

Question

Quizplus · Accepted Answer

Increasing financial leverage will increase the company's interest expense, which would lower net income and therefore EPS. If the EPS is already very low, increasing the financial leverage will exacerbate the situation and make the EPS even lower.

If a Firm Increases Its Use of Financial Leverage,then What