Question

One way of measuring the advantage of financial leverage to the owners of the company is​ ________. A. to examine the earnings per share​ (EPS) of a company after borrowing from debt lenders B. to examine the earnings per share​ (EPS) of a company before and after borrowing from debt lenders C. to examine the dividends per share​ (DPS) of a company before and after borrowing from debt lenders D. to examine the earnings per share​ (EPS) of a company before borrowing from debt lenders

Answer 1

Hello there!

Your question asks one way of measuring the advantage of financial leverage to the owners of the company.

Answer: B. to examine the earnings per share​ (EPS) of a company before and after borrowing from debt lenders

The reason why answer choice "B. to examine the earnings per share​ (EPS) of a company before and after borrowing from debt lenders" would be the correct answer because this is one of the ways of measuring the advantage of financial leverage to the owners of the company.

EPS is the earnings per share, in other words ,the amount of money that they make from each share.

To find the leverage, you would need to examine the EPS from a specific company that borrowed from debt lenders. The debt lenders help a company keep out of the debt by helping them out purchase products or other things of that sort. They would need to see the before and after to see if there was any leverage.

I hope this helps!

Best regards,

MasterInvestor