Question: Financial leverage is concerned with the relation between changes in EBIT and changes in EPS. The degree of financial leverage ( DPL ) can be

Financial leverage is concerned with the relation between changes in EBIT and changes in EPS. The degree of financial leverage

(

DPL

)

can be calculated as the ratio between EBIT and EBT.

Assume that company ABC Inc. is fully equity financed and hence does not emply any debt. Whichrof the following statements regarding its financial leverage is correct?

ABC Inc's operating leverage is equal to its financial leverage.

There is not enough information provided to setens ABC Incls financial leverage

ABC Inc. has a financial leverage of

1 .

ABC Inc has a financial leverage of

0 .

Financial leverage is concerned with the relation

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