Which of the following is correct? Group of answer choices Degree of financial leverage is...
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Finance
Which of the following is correct? Group of answer choices
Degree of financial leverage is caused by fixed interest expense and fixed preferred stock dividend.
To measure degree of financial leverage, one divides EBIT by (EBIT - interest expense - preferred stock dividend/(1-tax rate)).
To measure degree of financial leverage, one divides % change in EPS/% change in sales.
Preferred stock dividend is pre-tax dollar just like interest expense.
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