Total leverage exists whenever the percentage change in earnings per share (EPS) resulting from a given percentage change in sales is greater than the percentage change in sales.

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This is the definition of total leverage, where a company can use fixed costs to increase its profits and earnings per share. Total leverage is present when the percentage change in EPS resulting from a change in sales is greater than the percentage change in sales itself. This means that the company is able to leverage its fixed costs to generate more profit with the same increase in sales, leading to higher EPS.

Total Leverage Exists Whenever the Percentage Change in Earnings Per