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A change in EPS due to a unit change in EBIT is captured by:
ADOL
BPE Ratio
CDCL
DDFL
Answer & Solution
Correct answer: D. DFL
1. DFL = % change in EPS / % change in EBIT.
2. Captures effect of fixed financial cost (interest, preference dividend).
3. Magnifies EBIT changes onto EPS.
_Source: ICAI BoS CA Inter Paper 6A, Ch 6 "Financing Decisions — Leverages", §4.1_
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