A DFL (degree of financial leverage) of 3.0 indicates a 27% increase in EPS is the result of a(n) ____ increase in EBIT.
A) 81%
B) 3%
C) 9%
D) 6%

Name: A DFL (degree of financial leverage) of 3.0 indicates a 27% increase in EPS is the result of a(n) ____ increase in EBIT. A) 81% B) 3% C) 9% D) 6%
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Question

Quizplus · Accepted Answer

DFL = % Change in EPS / % Change in EBIT
3.0 = 27% / X
X = 9% 
Therefore, a 9% increase in EBIT will result in a 27% increase in EPS with a DFL of 3.0.

A DFL (Degree of Financial Leverage) of 3