If company A has a higher degree of operating leverage than company B, then: company A is more profitable. company A has higher variable expenses. company A is less risky. company A's profits are more sensitive to percentage changes in sales.

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 41MCQ
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If company A has a higher degree of operating leverage than company B, then:

  • company A is more profitable.
  • company A has higher variable expenses.
  • company A is less risky.
  • company A's profits are more sensitive to percentage changes in sales.
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