Provided a firm does not use an extreme amount of debt,operating leverage typically affects only EPS,while financial leverage affects both EPS and EBIT.

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Operating leverage affects a company's operating income (EBIT), as it is related to the company's fixed costs and its impact on earnings before interest and taxes. Financial leverage, on the other hand, affects both EBIT (due to the cost of debt financing) and EPS (earnings per share), as it influences the net income available to shareholders after interest expenses.

Provided a Firm Does Not Use an Extreme Amount of Debt,operating