Question
Financial leverage affects the performance of a firm because the range of possible values for Blank______.
Multiple choice question.
earnings per share is wider
operating income is wider
operating income is smaller
earnings per share is smaller
Multiple choice question.
earnings per share is wider
operating income is wider
operating income is smaller
earnings per share is smaller
Answers
GPT-4o mini
Financial leverage affects the performance of a firm because the range of possible values for **earnings per share is wider**.
Higher financial leverage can lead to greater fluctuations in earnings per share due to the fixed cost of debt. If a firm performs well, the returns on equity can be significantly higher; conversely, if it performs poorly, the losses may also be amplified.
Higher financial leverage can lead to greater fluctuations in earnings per share due to the fixed cost of debt. If a firm performs well, the returns on equity can be significantly higher; conversely, if it performs poorly, the losses may also be amplified.