The Degree of Operating Leverage Is Equal To

question 9

Multiple Choice

The degree of operating leverage is equal to:

• A) 1 + OCF/(FC + VC).
• B) 1 + OCF/FC.
• C) 1 + FC/OCF.
• D) 1 + VC/OCF.
• E) 1 − (FC + VC)/OCF.

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Definitions:

Normal Cash Flows

Regular inflows or outflows of cash associated with operational activities of a business within a specific period.

Modified Internal Rate of Return (MIRR)

A capital budgeting method that adjusts the internal rate of return calculation to better reflect the project's cost of capital and investment returns.

Real Internal Rate of Return

The adjusted rate of return that accounts for inflation, providing a more accurate measure of the actual purchasing power of future cash flows from an investment.

Unemployed Persons

Unemployed persons are individuals who are actively seeking employment but are unable to find work, a key indicator of a country's economic health.