A Company with a High Operating Leverage Will Experience

question 31

Multiple Choice

A company with a high operating leverage will experience

• A)a large percentage change in operating income as a result of a small percentage change in sales.
• B)a small percentage change in operating income as a result of a small percentage change in sales.
• C)the same percentage change in operating income as a result of a percentage change in sales.
• D)a small percentage change in operating income as a result of a large percentage change in sales.

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Definitions:

Super Bowl

An annual championship game in American football that marks the end of the National Football League season, known for its high viewership and expensive advertising spots.

Sports Illustrated

A popular American sports magazine known for its extensive coverage of sports and athletes.

AARP The Magazine

A bi-monthly magazine targeted at people over 50, focusing on health, finance, and lifestyle, published by the American Association of Retired Persons (AARP).

Wasted Coverage

Expenditure on advertising or sales efforts that reach an audience not interested in the product, leading to inefficient spending.