Question: For every 1 percent decrease in sales of a firm, the EBIT decreases by 3.2 percent. What does this statement indicate? Please explain. a. The

For every 1 percent decrease in sales of a firm, the EBIT decreases by 3.2 percent. What does this statement indicate? Please explain.

a.

The debt/assets ratio of the firm is 3.2 times.

b.

The degree of operating leverage of the firm is 3.2 times.

c.

The current assets of the firm are 3.2 times its current liabilities.

d.

The expenses of the firm are 3.2 percent of its income.

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