Which of the Following Statements About Operating Leverage Is True

question 29

Multiple Choice

Which of the following statements about operating leverage is true?

• A) Operating leverage reduces a firm's risk.
• B) Operating leverage is the responsiveness of the firm's EBIT to fluctuations in sales.
• C) Operating leverage involves the usage of fixed cost financial securities in the operation of a business.
• D) Operating leverage is the responsiveness of the firm's EPS to fluctuations in sales.

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Definitions:

Caribbean Plate

A mostly oceanic tectonic plate underlying Central America and the Caribbean Sea off the north coast of South America.

Transform Fault

A type of fault where two tectonic plates slide past each other horizontally, often associated with earthquakes.

Subduction Zone

A geological region where one tectonic plate slides underneath another, often leading to volcanic activity and earthquakes.

Transform Fault

A type of strike-slip fault where two tectonic plates slide past each other horizontally.