Why should I choose AnalystNotes?

AnalystNotes specializes in helping candidates pass. Period.

Find out more

Basic Question 4 of 5

The greater the percentage of assets financed by debt, the more sensitive EPS is to any change in ______.

A. variable financing receipts
B. operating leverage
C. sales
Check Answer Previous Q Next Q Print

User Contributed Comments 4

User Comment
setmefree TDL (total degree of leverage) = DOL*DFL(financial leverage), TDL measures sensitivity of changes in EPS in response to changes in sales; assume a constant degree of leverage, higher DFL indicates higher TDL
Khadria DTL = DOL * DFL = (Delta EBIT / Delta Sales) * (Delta EPS / Delta EBIT) = Delta EPS / Delta Sales
kodali Doesn't real costs affect EBIT
myron yes real costs affect EBIT but it has nothing to do with financing which this question asks.
You need to log in first to add your comment.
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu

Edward Liu

Learning Outcome Statements

evaluate a company's capital investments and capital structure

CFA® 2025 Level I Curriculum, Volume 3, Module 5.