I heard something from Bob the bartender the other day (Joe, the former bartender, left to form a financial consulting company). He said one type of leverage affects both EBIT and EPS. Then he said the other type of leverage affects only EPS. What do you think he meant by each of his statements?© BrainMass Inc. brainmass.com March 4, 2021, 10:14 pm ad1c9bdddf
Bob, the Bartender was talking about operating leverage and financial leverage. Operating leverage reflects the extent to which fixed assets and associated fixed costs ...
The solution goes into a great amount of detail regarding the question being asked about leverage affecting both EBIT and EPS. Step-by-step explanation is provided for each part of the question which makes it very easy to follow along for anyone with just a basic understanding of the concepts. Overall, an excellent response to the question being asked.