The capital intensisve nature of the steel business

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Reference no: EM131065712

Amalagmated Mining has very high operating leverage due to the capital intensisve nature of the steel business. The firms CEO is concerned about the variability in the firms EPS is sales should drop, and decides to take action. Which of thee following will reduce the variability in the firms EPS for a given change in sales?

A-The CEO may decrease the firms financial leverage, thus lowering the firms total leverage

B-The CEO may increase the firms financial leverage and hence reduce the variability by using non-shareholder money to support the business

C- The CEO may issue more corporate bonds and use the proceeds to pay off short-term liabilities.

D- The CEO may increase the firms total leverage by raising money from the sale of the common stock

Reference no: EM131065712

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