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Combined Leverage of 2.5 and 4% increase in sales will change EPS by approximately:
A4%
B6%
C10%
D8%
Answer & Solution
Correct answer: C. 10%
1. %ΔEPS = DCL × %ΔSales = 2.5 × 4%.
2. Result = 10%.
3. Reflects combined operating and financial risk.
_Source: ICAI BoS CA Inter Paper 6A, Ch 6 "Financing Decisions — Leverages", §5_
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