{"id":44727,"date":"2024-04-15T21:47:49","date_gmt":"2024-04-15T21:47:49","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=44727"},"modified":"2024-04-15T21:47:49","modified_gmt":"2024-04-15T21:47:49","slug":"for-a-constant-ebit-if-the-debt-level-is-further-increased-then","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/for-a-constant-ebit-if-the-debt-level-is-further-increased-then\/","title":{"rendered":"For a constant EBIT, if the debt level is further increased then:"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;EPS will always increase&#8221; option2=&#8221;EPS may increase&#8221; option3=&#8221;EPS will never increase&#8221; option4=&#8221;None of the above&#8221; correct=&#8221;option2&#8243;]<!--more--><\/p>\n<p>The correct answer is: B. EPS may increase.<\/p>\n<p>EPS is calculated by dividing EBIT by the number of shares outstanding. If EBIT is constant, then increasing the debt level will increase the number of shares outstanding, which will decrease EPS. However, if EBIT increases as a result of the increased debt level, then EPS may increase.<\/p>\n<p>Here is a more detailed explanation of each option:<\/p>\n<ul>\n<li>Option A: EPS will always increase. This is not necessarily true. As explained above, increasing the debt level will increase the number of shares outstanding, which will decrease EPS. However, if EBIT increases as a result of the increased debt level, then EPS may increase.<\/li>\n<li>Option B: EPS may increase. This is the correct answer. As explained above, increasing the debt level will increase the number of shares outstanding, which will decrease EPS. However, if EBIT increases as a result of the increased debt level, then EPS may increase.<\/li>\n<li>Option C: EPS will never increase. This is not necessarily true. As explained above, if EBIT increases as a result of the increased debt level, then EPS may increase.<\/li>\n<li>Option D: None of the above. This is not the correct answer. As explained above, EPS may increase if EBIT increases as a result of the increased debt level.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;EPS will always increase&#8221; option2=&#8221;EPS may increase&#8221; option3=&#8221;EPS will never increase&#8221; option4=&#8221;None of the above&#8221; correct=&#8221;option2&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-44727","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>For a constant EBIT, if the debt level is further increased then:<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/for-a-constant-ebit-if-the-debt-level-is-further-increased-then\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"For a constant EBIT, if the debt level is further increased then:\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;EPS will always increase&#8221; 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