1 - cash ratio= Cash + Cash Equivalents/Current Liabilities2 - AR turn over=Net receivable sales/ Average net receivables 3- DFL = % Change in EPS / % Change in EBIT
A leverage ratio summarizing the affect a particular amount of financial leverage has on a company's earnings per share (EPS). Financial leverage involves using fixed costs to finance the firm, and will include higher expenses before interest and taxes (EBIT). The higher the degree of financial leverage, the more volatile EPS will be, all other things remaining the same. The formula is as follows:
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