Quiz Ch 13 – T/F Debt Impact on Earnings Per Share Sensitivity

Fundamentals of Financial Management, Concise

Brigham and Houston

09th Edition

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True or false: If a firm employs debt financing, a 10% reduction in earnings before interest and taxes (EBIT) leads to a greater-than-10% decline in earnings per share (EPS). Moreover, a higher debt ratio magnifies this disparity.

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  • Search Terms: a. b. false true % %, (ebit) a and be. before debt decline difference earnings financing, firm higher if in interest is larger per ratio, result share taxes than that the this utilizes will
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