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. O c. 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 anothe company with low degree of operating leverage. The degree of operating leverage is higher for companies with lower fixed costs e.

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Degree of operating leverage (DOL) measures the sensitivity of OCF in response to changes of The higher the DOL, the the volatility of a firm's operating income. Select one: a. sales quantity; lower O b. sales quantity; higher O c. fixed costs; lower O d. fixed costs; higher O e. variable costs; higher

Everything else equal, an industry with more leverage will have a: higher return on assets. higher return on equity. lower return on equity. Both A & B

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.

Companies often use leverage to augment profits.  Based on what you learned this week, please explain the following in detail: With regards to Operating Leverage, please explain why a company with HIGH Operating Leverage faces greater financial risk in a declining sales period compared to a company with LOW Operating Leverage.  (HINT: The key here is the relation between fixed costs and variable costs.) What does a business's Contribution Margin represent?  What does the Contribution Margin have to do with Operating Leverage?

10. Other things being equal, the higher the degree of operating leverage, the profit opportunity with increased sales and risk of loss with a decrease in sales. A) Lower; higher B) Higher; lower c) Lower; lower D) Higher; higher Your answer is Explain your answer:

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.