CONNECT WITH LEARNSMART FOR BODIE: ESSE
CONNECT WITH LEARNSMART FOR BODIE: ESSE
11th Edition
ISBN: 2819440196239
Author: Bodie
Publisher: MCG
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Chapter 12, Problem 12PS

ATech has fixed costs of $ 7 million and profits of $ 4 million. Its competitor, ZTech, is roughly the same size and this year earned the same profits, $ 4 million. But it operates with higher fixed costs of $ 8 million and lower variable costs. LO 12 3
a. Which firm has higher operating leverage?
b. Which firm will likely have higher profits if the economy strengthens?

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