A Company with a Higher Degree of Operating Leverage Is

question 105

True/False

A company with a higher degree of operating leverage is at greater risk during economic downturns because of its higher fixed costs.

---

Definitions:

Maximum Inventory

The highest quantity of goods that a company aims to keep in stock, considering factors like storage space and cash flow constraints.

Memory Chips

Electronic components that store digital data, used in various computing devices for temporary or permanent data storage.

Quantity Discount

A reduction in price offered to a buyer when purchasing goods in larger quantities, serving as an incentive for bulk purchases.

Carrying Cost

The total cost of holding a particular asset on a company’s books, which can include storage, interest, depreciation, and insurance.