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.

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.

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 44MCQ: When a Dupont analysis reveals that a company has much higher than average asset turnover and much...

See similar textbooks

Similar questions

?Which of the following statements about operating leverage is false The degree of operating leverage is higher for companies with higher fixed costs .a O .Keeping all factors constant, the higher the contribution margin, the higher the operating leverage .b O 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 .c O All of the given answer's are true d O Operating leverage measures how operating income will be affected by changes in sales .e O
Which of the following statements about operating leverage is false? a. Operating leverage measures how operating income will be affected by changes in sales b. The degree of operating leverage is higher for companies with lower fixed costs c. Keeping all factors constant, the higher the contribution margin, the higher the operating leverage. d. All of the given answers are true. e. 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.
Is this situation consistent with a monopolistically competitive firm maximizing profit? If yes, is it consistent with LR? P
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.
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
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. NEXT PAG GE ere to search
19. If company A has a higher degree of operating leverage than company B, then: Multiple Choice a)company A's profits are more sensitive to percentage changes in sales. b)company A is less risky. c)company A's variable expenses are high. d)company A is more profitable.
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.
If a firm is using financial leverage successfully, the ROE should be a. higher than the profit margin b. higher than ROA c. lower than if no leverage were used d. higher than if no leverage were used
If a firm decreases its operating costs, all else constant, then the: A. profit margin will decrease.B. return on assets will decrease.C. total asset turnover rate will increase.D. cash coverage ratio will decrease.E. price-earnings ratio will decrease Can you give me detailed explanation?
Which of the following statements about operating leverage is NOT true? Group of answer choices Operating leverage predicts the effect of fixed costs on operating income when sales volume changes. A higher proportion of fixed cost in a cost structure results in higher operating leverage. The higher the operating leverage, the higher the risk of loss when sales volume decreases. A higher proportion of fixed cost in a cost structure results in lower operating leverage.
1. What is the controllable margin of Greer Company? 2. What is the return on investment of Greer Company?