Operating Leverage Is the Degree of Dependence a Firm Places

question 47

Multiple Choice

Operating leverage is the degree of dependence a firm places on its:

• A)variable costs.
• B)fixed costs.
• C)sales.
• D)operating cash flows.
• E)net working capital.

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Definitions:

Purchasing Costs

The total expenses incurred in buying goods or services, including the price of the product, taxes, shipping, and handling fees.

Stockouts

The situation that occurs when an item is not in stock and cannot be sold to a customer, often leading to lost sales and customer dissatisfaction.

Push-Pull Strategy

A promotional strategy combining both push tactics (direct selling to customers) and pull tactics (attracting customers via advertising) to drive product demand.

Forecast Sales

The process of estimating future sales performance based on historical data, market analysis, and other predictive factors.