Ask Question
BusinessBusiness
15 September, 11:15

A company with high operating leverage:

a. is less sensitive to changes in sales.

b. has an equal proportion of fixed and variable costs.

c. has a greater proportion of fixed costs to variable costs.

d. has a greater proportion of variable costs to fixed costs.

+5
Answers (1)
  1. 15 September, 11:32
    0
    Answer: c. has a greater proportion of fixed costs to variable costs

    Explanation: Operating leverage is a measure a firm's fixed costs as a percentage of its total costs. In order words, it measures the amount of debt the firm uses in finance its operations.

    A company with high operating leverage is one with a greater proportion of fixed costs to variable costs. As a result, the firm is affected by volume of sales each month (since it must attain sufficient sales volume to cover its substantial fixed costs) even though it earns a large profit on each incremental sale.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A company with high operating leverage: a. is less sensitive to changes in sales. b. has an equal proportion of fixed and variable costs. ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Last year Tiemann Technologies reported $10,500 of sales, $6,250 of operating costs other than depreciation, and $1,300 of depreciation. The company had no amortization charges, it had $5,000 of bonds that carry a 6.
Answers (1)
A company has budgeted sales for January and February of 20,000 and 25,000 units, respectively. The selling price is $5 per unit and the purchase price is $3 per unit. Budgeted ending inventory is 10% of the next month's sales.
Answers (1)
Bob applies for an insurance policy and, because of his medical history, is required to submit an attending physician's statement. He receives the evaluation, and the report is submitted.
Answers (1)
Tactical decisions are concerned with a. the domain of operations managers, who are close to the customer. b. the day-to-day activities of the organization. c. how the organization should achieve the goals and objectives set by its strategy. d.
Answers (2)
Maya, the store manager for a fast food restaurant, is committed to ensuring that her staff members work in a nurturing environment that promotes growth, acknowledgement, and reward. She respects her employees' ideas and wants them to be content.
Answers (1)
New Questions in Business
Stephanie was injured in a car accident and was rushed to the emergency room. She received stitches for a facial wound and treatment for a broken finger.
Answers (1)
Stock A has a beta of 1.19 and an expected rate of return of 13.42 percent. The market risk premium is 8.2 percent and the risk-free rate is 4.1 percent.
Answers (1)
Suppose a capital budgeting project generates its largest cash flows in the early years of its life (i. e., up front) rather than near the end of its life. In this situation. Which of the following statements about the project must be correct?
Answers (1)
Katherine was laid off from her job 11 months ago. After searching for a job for months, Katherine gives up her job search because she feels there are no jobs available for her. Economists would classify Katherine as a. employed. b.
Answers (1)
Suppose that a firm builds a factory overseas, staffs it with foreign workers, uses materials supplied by foreign companies, and finances the entire operations with a loan from a foreign bank located in the same town as the factory.
Answers (1)
Home » Business » A company with high operating leverage: a. is less sensitive to changes in sales. b. has an equal proportion of fixed and variable costs. c. has a greater proportion of fixed costs to variable costs. d.
Sign Up Forgot Password?