At the EPS indifference point, two companies would have:
A)the same sales level regardless of the number of outstanding shares.
B)the same sales level regardless of the debt to equity ratio.
C)the same EPS regardless of the number of shares.
D)the same EPS regardless of the financing scheme adopted.

Question

Quizplus · Accepted Answer

At the EPS indifference point, the two companies would have the same EPS regardless of the financing scheme adopted. This means that regardless of whether the companies choose to finance their operations through debt or equity, they would have the same EPS. The EPS indifference point can be used to determine the optimal financing mix for a company, as it shows the point at which the EPS is the same regardless of the financing mix.

At the EPS Indifference Point, Two Companies Would Have