Which of the Following Is True for a Firm with High

question 95

Multiple Choice

Which of the following is true for a firm with high operating leverage?

• A)It has a relatively high amount of mixed costs.
• B)It is generally thought to be riskier than a company with lower operating leverage.
• C)It has a zero contribution margin ratio at the break-even point.
• D)If sales increase, its profits will increase at a slower rate than a company with lower operating leverage.

Understand the financial implications of selecting an annuity due versus an ordinary annuity in investment and borrowing contexts.

Evaluate the financial viability of investment opportunities, including rental properties, based on cash flow projections and discount rates.

Understand the concept and application of yield management in different sectors.

Analyze demand curves and price points for revenue maximization.

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Definitions:

Employee Involvement

The degree to which employees are encouraged to share their ideas and suggestions, potentially contributing to improved decision-making and productivity.

Indirect Manufacturing Functions

Activities necessary for production that do not directly involve the transformation of materials into finished products, such as maintenance and supervision.

Lean Accounting System

An approach to accounting that focuses on reducing waste, improving efficiency, and providing value to customers.

Transactions

Business events that have a monetary impact on the financial statements of an organization.