Which One of the Following Statements Is True Concerning Operating

question 196

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.

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