Do You Think a Country with High Levels of Inflation

question 21

Essay

Do you think a country with high levels of inflation can be a less attractive investment opportunity? Give reasons to support your answer.

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Definitions:

Operating Leverage

A measure of how sensitive a company's operating income is to changes in revenue, indicating the degree to which fixed costs affect profitability.

Sales Revenue

The total amount of money received by a company from its sales of goods or services before any expenses are subtracted.

DOL

Stands for Degree of Operating Leverage, which measures a company’s sensitivity of operating income to its sales.

EBIT

Earnings Before Interest and Taxes represent a company's profit before deducting expenses from interest and income taxes.