The degree of leverage concept is designed to show how changes in sales affect earnings before interest and taxes (EBIT) and earnings per share (EPS). If a 10 percent increase in sales causes EPS to increase from $1.00 to $1.50 and if the firm uses no debt, then what is its degree of operating leverage?
A)0.5×
B)1.5×
C)2.0×
D)5.0×
E)7.5×

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The Answer of The degree of leverage concept is designed to show how changes in sales affect earnings before interest and taxes (EBIT) and earnings per share (EPS). If a 10 percent increase in sales causes EPS to increase from $1.00 to $1.50 and if the firm uses no debt, then what is its degree of operating leverage?
A)0.5×
B)1.5×
C)2.0×
D)5.0×
E)7.5×

The Degree of Leverage Concept Is Designed to Show How