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.A. TRUEB. FALSE
Earnings variability is sometimes considered a negative sign as investors do not know whether the company's earnings in one year can be sustained in the next and this would happen with Firm A if it is proven to have more risk
