New World Manufacturing has determined that its degree of financial leverage (DFL) is 3.0 when sales equal $750,000, which happens to be its operating breakeven point (i.e., SOpBE = $750,000). At sales equal to $750,000, which of the following conditions must exist for New World Manufacturing? Assume everything else is equal. A)Earnings per share (EPS) = 0 B)Earnings per share (EPS) 0 C)Earnings per share (EPS) 0 E)Total operating costs = 0

Question

New World Manufacturing has determined that its degree of financial leverage (DFL) is 3.0 when sales equal $750,000, which happens to be its operating breakeven point (i.e., SOpBE = $750,000). At sales equal to $750,000, which of the following conditions must exist for New World Manufacturing? Assume everything else is equal. 
A)Earnings per share (EPS) = 0
B)Earnings per share (EPS) > 0
C)Earnings per share (EPS) < 0
D)Earnings before interest and taxes (EBIT) > 0
E)Total operating costs = 0

Quizplus · Accepted Answer

The Answer of New World Manufacturing has determined that its degree of financial leverage (DFL) is 3.0 when sales equal $750,000, which happens to be its operating breakeven point (i.e., SOpBE = $750,000). At sales equal to $750,000, which of the following conditions must exist for New World Manufacturing? Assume everything else is equal. 
A)Earnings per share (EPS) = 0
B)Earnings per share (EPS) > 0
C)Earnings per share (EPS) < 0
D)Earnings before interest and taxes (EBIT) > 0
E)Total operating costs = 0

New World Manufacturing Has Determined That Its Degree of Financial