At the bottom of Box 14.5 in this chapter there is a formula that shows how leverage
Question:
At the bottom of Box 14.5 in this chapter there is a formula that shows how leverage affects earnings growth. Apply this formula to explain the increase in the earnings growth rate from 10 percent to 11.67 percent in Year 2 as a result of the increase leverage in the example above it.
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The formula in Box 145 is Growth rate for earnings t Growth rate for operating inco...View the full answer
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Related Book For 
Financial Statement Analysis and Security Valuation
ISBN: 978-0078025310
5th edition
Authors: Stephen Penman
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