A Firm with High Operating Leverage Has

question 48

Multiple Choice

A firm with high operating leverage has:

• A) low fixed costs in its production process.
• B) high variable costs in its production process.
• C) high fixed costs in its production process.
• D) high price per unit.
• E) low price per unit.

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Definitions:

Commission Charges

Fees charged by brokers or agents for their service in facilitating a transaction, often a percentage of the sale value.

Total Cost

The complete amount of money spent on producing or acquiring a product or service, including all variable and fixed expenses.

Par Value

The face value of a bond or stock as stated by the issuing company.

Dividend Per Share

The amount of dividend that a company pays out for each share of its stock over a designated period.