The Degree of Operating Leverage Is Equal To

question 13

Multiple Choice

The degree of operating leverage is equal to:

• A)the percentage change in quantity divided by the percentage change in OCF.
• B)the percentage change in sales divided by the percentage change in OCF.
• C)1 + FC/OCF.
• D)1 + VC/OCF.
• E)1 - (FC + VC)/OCF.

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Definitions:

Future Dividends

Future Dividends refer to dividend payments that a company is expected to issue to its shareholders in the future, based on its earnings and dividend policy.

Residual Dividend Policy

A residual dividend policy involves a company paying out dividends from the leftover net income after all operational and project financing needs are met.

Rate of Growth

The pace at which a company, economy, or investment increases in size or value over a specific period.

Constant Dividends

A fixed amount of dividend that a company pays out to its shareholders regularly, typically annually.