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Degree of financial leverage is a measure of relationship between

This question belongs to Commerce Financial Management
Financial Management
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Degree of financial leverage is a measure of relationship between ___________.

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Correct Answer: Option A
Degree of financial leverage is a measure of relationship between EPS and EBIT. The degree of financial leverage (DFL) measures the percentage change in EPS for a unit change in operating income, also known as earnings before interest and taxes (EBIT). This ratio indicates that the higher the degree of financial leverage, the more volatile earnings will be.
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