If EBIT equals $200,000 and interest equals $40,000, what is the degree of financial leverage?
A) 5.33x
B) 1.25x
C) 0.8125x
D) 4.33x

Name: If EBIT equals $200,000 and interest equals $40,000, what is the degree of financial leverage? A) 5.33x B) 1.25x C) 0.8125x D) 4.33x
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The degree of financial leverage (DFL) is calculated as: DFL = EBIT / (EBIT - Interest). Plugging in the given values: DFL = $200,000 / ($200,000 - $40,000) = $200,000 / $160,000 = 1.25x.

If EBIT Equals $200,000 and Interest Equals $40,000, What Is