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 tha 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.
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 tha 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.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text: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.
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