A Firm with High Operating Leverage Is Best Defined as a Firm

question 76

Multiple Choice

A firm with high operating leverage is best defined as a firm that has

• A)a high debt-to-equity ratio.
• B)high fixed costs relative to variable costs.
• C)a low,relatively stable beta.
• D)high variable costs relative to fixed costs.
• E)a high sales/assets ratio.

---

Definitions:

Recession

A noticeable drop in economic activity affecting the entire economy, enduring for longer than several months, and commonly observed in metrics such as real GDP, real income, employment, industrial output, and wholesale-retail transactions.

Aggregate Demand

Whole demand for goods and services across an economic landscape, appraised at a given overall price point throughout a defined timeframe.

Household Saving

The portion of a household's disposable income that is not spent on current consumption but is set aside for future use.

Consumption

The use of goods and services by households, constituting one of the primary components of GDP and an important indicator of economic health.