Which of the Following Statements Is Correct

question 79

Multiple Choice

Which of the following statements is correct?

• A)The degree of operating leverage (DOL) depends on a company's fixed costs, variable costs, and sales.The DOL formula assumes (1) that fixed costs are constant and (2) that variable costs are a constant proportion of sales.
• B)The degree of total leverage (DTL) is equal to the DOL plus the degree of financial leverage (DFL).
• C)Arithmetically, financial leverage and operating leverage offset one another so as to keep the degree of total leverage constant.
• D)The above statements are all true.
• E)The above statements are all false.

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Definitions:

Condition

A specific requirement or stipulation that defines or restrains an event or action in a legal context.

Drafts

Written orders for the payment of a specified sum of money from one party to another, often used in international trade.

Documents

Documents are written, drawn, presented, or memorialized representations of thoughts, which serve as evidence or information.

Buyer

A person or organization that purchases goods or services from another business or individual, entering into a commercial transaction.