What Happens to a Firm with High Operating Leverage When

question 47

Multiple Choice

What happens to a firm with high operating leverage when the overall level of sales is very high?

• A) The firm is likely to have higher levels of fixed costs.
• B) The firm is likely to enjoy high profits.
• C) The firm will not break even in accounting terms.
• D) The firm will have a reduced level of depreciation.

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Definitions:

Creativity

The ability to generate innovative ideas and solutions.

Management By Objectives

A management strategy in which employees and managers establish clear, specific objectives that are used to measure and guide performance and achievements.

Objective Attainment

The process of setting, pursuing, and achieving goals, which are often quantifiable and specific, within an organization or personal setting.

Performance Monitoring

The systematic process of tracking, analyzing, and improving an individual's or organization's performance over time.