The Manufacturing fiRm of Trevnor and Trist Have a Degree

question 372

Essay

The manufacturing firm of Trevnor and Trist have a degree of operating leverage of 1.8. The firm
feels that this level makes their firm too susceptible to severe damage should the economy turn
downward. What actions can the firm take to lower their degree of operating leverage?

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Definitions:

Unilateral Contract

A contract where one party makes a promise in exchange for an act by another party, which upon performance, binds the first party to its promise.

Promissory Estoppel

A law that stops someone from going back on a commitment they've made to another if the second party has trusted this promise to their own disadvantage.

Promissory Estoppel

A judicial doctrine that forbids a party from revoking an assurance given to another party if the recipient has legitimately acted on that promise to their detriment.

Quasi Contract

A legal concept where a court imposes a contractual obligation on a party who has not expressly consented to it, to prevent unjust enrichment.