Degree of Operating Leverage Is Calculated As

question 26

Multiple Choice

Degree of operating leverage is calculated as:

• A)profit divided by contribution margin.
• B)break-even sales divided by profit.
• C)profit divided by break-even sales.
• D)contribution margin divided by profit.

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Definitions:

Asset Turnover Ratio

A financial metric that measures the efficiency of a company using its assets to generate sales or revenue.

Earnings Per Share

A financial ratio indicating the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Net Income

is the profit a company makes after deducting all costs and expenses from its total revenue, including taxes and interest.

Interest Expense

The cost incurred by an entity for borrowed funds, which can include payments on loans, bonds, or lines of credit.