If a firm increases its financial leverage,then what would we generally expect for the effect of that increased leverage on EPS to be if the firm's EPS is already quite high?

Question

Quizplus · Accepted Answer

Increasing financial leverage typically means the firm is using more debt in its capital structure. If the firm's EPS is already quite high, leveraging more debt can lead to higher EPS if the cost of debt is lower than the return the firm earns on those borrowed funds, due to the tax deductibility of interest and the leverage effect.

If a Firm Increases Its Financial Leverage,then What Would We