.............is a situation of favourable Financial leverage.

ROI > Cost of Debt

The proportion of debt in the overall capital is also called financial leverage. Financial leverage is computed as D/E or / (D + E), when D is the Debt and E is the Equity. As the financial leverage increases, the cost of funds declines because of increased use of cheaper debt but the financial risk increases.
With higher use of debt upto a point, the difference between RoI and cost of debt increases the EPS. This is a situation of favourable financial leverage. In such cases, companies often employ more of cheaper debt to enhance the EPS. Such practice is called Trading on Equity.
Thus, If the RoI of the company is higher, it can choose to use trading on equity to increase its EPS, i.e., its ability to use debt is greater.