Which of the Following Is a Key Determinant of Operating

question 116

Multiple Choice

Which of the following is a key determinant of operating leverage?

• A) Level of debt.
• B) Physical location of production facilities.
• C) Cost of debt.
• D) Technology.
• E) Capital structure.

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Definitions:

Return on Equity

A metric indicating financial success determined by dividing a company's net income by its shareholders' equity, demonstrating the efficacy of using investments to create increased profits.

Net Profit Margin

A financial metric that shows the percentage of revenue that remains as profit after all operating expenses, interest, taxes, and preferred stock dividends are deducted.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Debt-to-equity Ratio

A financial ratio highlighting the use of debt versus equity in the capital structure supporting a company's assets.