In a Company with Low Operating Leverage, ________

question 55

Multiple Choice

In a company with low operating leverage, ________.

• A) fixed costs are more than the contribution margin
• B) contribution margin and operating income are inversely related
• C) there is a higher possibility of net loss than a higher-leveraged firm
• D) less risk is assumed than in a highly leveraged firm

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Definitions:

Debt Obligation

A legally binding requirement to repay borrowed money, often including interest and the principal amount.