Operating Leverage Is Easier to Control and Manage Than Financial

question 44

True/False

Operating leverage is easier to control and manage than financial leverage because operating leverage deals with the internal workings of the company while financing deals with outside parties.

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Definitions:

Infinitely Price Elastic

Describes a situation where the quantity demanded or supplied changes by an unlimited amount in response to any change in price.

Total Revenues

The overall amount of money generated by a business from its normal business operations.

Total Costs

The complete amount of money spent by a business for producing or acquiring goods or services, including both fixed and variable costs.

Economic Profits

Economic profits are the financial gains that exceed the total costs of production, including both explicit and opportunity costs, indicating an above-normal return.