Above the break-even EBIT,there is no benefit in debt financing.

Name: Above the break-even EBIT,there is no benefit in debt financing.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This statement is false. Above the break-even EBIT, there can still be benefits to debt financing. One benefit is the tax shield on the interest payments. Interest payments on debt are tax-deductible, which can lower the company's tax liability and increase its after-tax profits. Additionally, debt financing can provide leverage to increase returns on equity.

Above the Break-Even EBIT,there Is No Benefit in Debt Financing