Financial leverage increases a firm's ROE and EPS under which of the following circumstances?

A) ROCE = cost of debt
B) ROCE > after tax cost of debt
C) ROCE
D) ROCE = cost of equity

ROCE

Return on Capital Employed (ROCE) is a financial ratio that measures a company's profitability in terms of the capital it uses.

ROE

Return on Equity; a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how much profit a company generates with the money shareholders have invested.

Debt

Debt represents money borrowed by one party from another, under the condition that it is to be paid back with interest, typically used for business operations or purchases.