If Additional financial leverage is always accompanied byadditional financial risk, then if the operating income that is expected toincrease actually decreases, shareholder experience a _______ of earnings pershare (EPS) and the rate of return becomes ______. Fill in the blanks.1 pointmagnification; volatilemagnification; steadydemagnification; steadydemagnification; volatile

If a company increases its financial leverage, how is the impact on Earnings Per Share (EPS)?a.EPS increasesb.EPS decreasesc.No impact on EPSd.EPS becomes negative

If a company has high operating leverage, what would be the likely effect on its risk and return?a.Higher risk and lower returnb.Lower risk and lower returnc.Higher risk and higher returnd.Lower risk and higher return

Financial leverage affects the performance of a firm because the range of possible values for Blank______.Multiple choice question.earnings per share is smalleroperating income is widerearnings per share is wideroperating income is smaller

Which of the following statements are true regarding the effect of financial leverage and the firm's operating earnings (EBI)?Multiple select question.Financial leverage increases the slope of the EPS line.The rate of return on assets is unaffected by leverage.Below the indifference or break-even point in EBIT, an unlevered capital structure is best.Above the indifference or break-even point in EBIT, the increase in EPS for all equity structures is greater than leveraged structures.

It is the distribution of a company's earnings to its shareholders1 puntoDividendsExpensesAssetsLiabilities