The correct answer is: A. EPS and EBIT.
Degree of financial leverage is a measure of how much a company’s earnings per share (EPS) will change in response to a change in its earnings before interest and taxes (EBIT). A company with a high degree of financial leverage will have a large change in its EPS for a given change in its EBIT, while a company with a low degree of financial leverage will have a small change in its EPS for a given change in its EBIT.
Option B is incorrect because EBIT and quantity produced are not directly related. A company’s EBIT can change for a number of reasons, including changes in sales prices, costs, and production levels. The quantity produced is just one factor that can affect a company’s EBIT.
Option C is incorrect because EPS and quantity produced are not directly related. A company’s EPS can change for a number of reasons, including changes in sales prices, costs, and production levels. The quantity produced is just one factor that can affect a company’s EPS.
Option D is incorrect because EPS and sales are not directly related. A company’s EPS can change for a number of reasons, including changes in sales prices, costs, and production levels. Sales is just one factor that can affect a company’s EPS.