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Unformatted text preview: Financial Leverage Similarly, for a large enough level of actual EBIT > expected EBIT, EPS can be increased by taking on greater interest expense (I) owing to a larger proportion of debt in the firms capital structure. This opportunity for higher EPS from taking on more debt and greater interest expense is called financial leverage. Doing so, however, exposes the firm to a larger percentage decrease in actual EPS away from EPS if actual EBIT falls short of expected EBIT....
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- Spring '08