A managerial preference for a very low degree of operating leverage might indicate that Select one: a. a decrease in sales volume is expected b. an increase in sales volume is expected. c. the firm has very high fixed costs. d. the firm is very unprofitable.

A managerial preference for a very low degree of operating leverage might indicate that Select one: a. a decrease in sales volume is expected b. an increase in sales volume is expected. c. the firm has very high fixed costs. d. the firm is very unprofitable.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 44MCQ: When a Dupont analysis reveals that a company has much higher than average asset turnover and much...

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A managerial preference for a very low degree of operating leverage might indicate that Select
one: a. a decrease in sales volume is expected b. an increase in sales volume is expected. c.
the firm has very high fixed costs. d. the firm is very unprofitable.

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Which of the following statements about operating leverage is false? a. Operating leverage measures how operating income will be affected by changes in sales b. The degree of operating leverage is higher for companies with lower fixed costs c. Keeping all factors constant, the higher the contribution margin, the higher the operating leverage. d. All of the given answers are true. e. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage.
Which of the following statements about operating leverage is false? O a. If the degree of operating leverage higher for a company, this means that the company is more riskyt another company with low degree of operating leverage. O b. Keeping all factors constant, the higher the contribution margin, the lower the operating leverage. O c. Operating leverage measures how operating income will be affected by changes in sales O d. All of the given answers are true. The degree of operating leverage is higher for comnanies with higher fived costs = here to search - hp %23 6. 7 V 3 4 W E R T' Y 岁 S D F G H K. V M. Σ 00 近
Which of the following statements about operating leverage is false? O a. All of the given answers are true. O b. Keeping all factors constant, the higher the contribution margin, the higher the operating leverage. OC. Operating leverage measures how operating income will be affected by changes in sales O d. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage. The degree of operating leverage is higher for companies with lower fixed costs O e.
A very high degree of operating leverage (DOL) indicates that a firm: A. has high fixed costs.B. has a high net income.C. has high variable costs.D. is operating close to its breakeven point.
Which of the following statements about operating leverage is NOT true? Group of answer choices Operating leverage predicts the effect of fixed costs on operating income when sales volume changes. A higher proportion of fixed cost in a cost structure results in higher operating leverage. The higher the operating leverage, the higher the risk of loss when sales volume decreases. A higher proportion of fixed cost in a cost structure results in lower operating leverage.
If a firm experience decreases in the per-unit costs of production as its network increases, then this firm is experiencing:
IA Cost is divided by the change in units. CLEAR MY CHOICE Which of the following statements about operating leverage is false? O a. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage. O b. Operating leverage measures how operating income will be affected by changes in sales O C. All of the given answers are true. O d. The degree of operating leverage is higher for companies with higher fixed costs O e. Keeping all factors constant, the higher the contribution margin, the lower the operating leverage. NEXT PAG GE ere to search
A competitive firm O Has the market power to compete effectively. O Confronts a downward-sloping firm demand curve. O Is large enough relative to the market to be taken into account by competitors. OIs a price taker.
Give typing answer with explanation and conclusion 5. Which of the following statements is correct? A-- All the answers are correct. B-- A more direct method of calculating the DOL is to use the following equation is DOL = (Sales - Variable Costs)/EBIT. C-- Because the amount of debt is determined by managerial choice, the business risk that a firm faces is also determined by management. D-- Fixed costs are those costs that are expected to change at the same rate as the firm’s sales. E-- If a firm’s operating costs are all variable, then any variation in sales will be less than the variation in EBIT.
A high operating margin implies that ______________ . The company is in a better position to increase its finance cost The company is in a better position to absorb the finance cost The company is in a better position to reduce its overheads The company is in a better position to increase its prices
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