Which One of the Following Statements Is True Concerning Operating

question 127

Multiple Choice

Which one of the following statements is true concerning operating leverage?

• A) The higher the degree of operating leverage, the greater the impact of forecasting risk.
• B) Firms with low operating leverage are said to be capital intensive.
• C) The degree of operating leverage is equal to [1 + (OCF/FC)].
• D) The degree of operating leverage is equal to the percent change in quantity divided by the percent change in operating cash flow.
• E) Operating leverage increases as the output quantity rises.

---

Definitions:

Desirability

The quality of being appealing, attractive, or sought-after, often in the context of products, traits, or attributes.

Availability

The extent to which a product, service, or resource is accessible and usable upon demand.

Tertiary Sector

represents the part of the economy concerned with services, as opposed to the extraction of raw materials or manufacturing.

Economy

The organized system of human activity involved in the production, consumption, and distribution of goods and services within a certain area or country.