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    Business Risk - EPS versus EBIT

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    Are any of the following correct?

    1. Suppose Company A's EPS is expected to experience a larger % of change in sales than Company B's EPS. Other things held constant, Company A would appear to have more business risk than Company B?

    2. Statement 1 would be correct if the term EBIT were substituted for EPS

    3. Statement 1 would be correct if the term EBIT were substituted for "Sales"

    4. Statment 1 would be correct if the words "financial risk" were substituted for "business risk"

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    https://brainmass.com/business/accounting/business-risk-eps-versus-ebit-52995

    Solution Summary

    This solution explains the concept of business risk.

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