The Degree of Operating Leverage Can Be Calculated As

question 34

Multiple Choice

The degree of operating leverage can be calculated as:

• A)net income divided by sales.
• B)gross margin divided by net income.
• C)contribution margin divided by net income.
• D)contribution margin divided by sales.

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Definitions:

Quick Ratio

A measure of a company's capacity to meet its short-term liabilities with its most liquid assets.

Liquidity Ratio

A financial metric used to determine an entity's ability to pay off its short-term debts with its most liquid assets, indicating financial health.

Current Ratio

A financial metric indicating a firm's capacity to meet its immediate financial liabilities with its present assets.

Net Cash

The amount of cash available after deducting liabilities, often considered in evaluating a company's liquidity.