If a Firm Has a Degree of Operating Leverage (DOL)

question 175

Multiple Choice

If a firm has a degree of operating leverage (DOL) that is greater than 1.0, the we know that a 1.0 percent change in will cause in a change in that is 1.0 percent.

• A)EBIT; sales; greater than
• B)EBIT; net income; greater than
• C)sales; EBIT; less than
• D)sales; EBIT; greater than
• E)EBIT; net income; less than

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Definitions:

Random Variables

Variables representing numerically measurable outcomes of random events.

Numerical

Pertaining to numbers, often used to describe data or methods that involve the manipulation or analysis of numbers.

Sample Space

The collection of every potential result that can occur from a statistical experiment.

Event

An outcome or set of outcomes within a sample space; something that can occur in an experiment.