It is possible for Firms A and B to have identical financial and operating leverage, yet for Firm A to have more risk as measured by the variability of EPS. This would occur if Firm A has more business risk than Firm B.
Answer the following statement true (T) or false (F)
True
Rationale: If Firm A's sales are more volatile than those of Firm B, then A would have greater EPS variability in spite of identical financial and operating leverage. Operating leverage is only one factor that affects business risk.
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