Which Company Is Likely to Have High Operating Leverage

question 37

Multiple Choice

Which company is likely to have high operating leverage?

• A) A company with high fixed costs.
• B) A company with high variable costs.
• C) A company with low fixed costs.
• D) A company financed largely by debt

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Definitions:

Authority

The right or power to act or to make a decision.

Third Party

An individual or group aside from the two primarily involved in a situation, agreement, or transaction, often providing additional services or playing a neutral role.

Principal

The primary party involved in a contractual agreement or the original amount of money lent or invested before interest.

Agent

An individual or entity authorized to act on behalf of another person or entity in dealings with third parties.