Smith Company Has a Degree of Operating Leverage of 5

question 121

Multiple Choice

Smith Company has a degree of operating leverage of 5, while an industry competitor, Johnson Company, has a degree of operating leverage of 2.Supplied with this knowledge, pick the response below that is most typical of Johnson Company.

• A)high fixed costs
• B)conservative
• C)large commitment to plant facilities
• D)greater low sales.

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Definitions:

Available Balance

The amount of funds in a bank account that is accessible for withdrawal or processing of checks or electronic payments, not including any holds, unprocessed transactions, or restrictions.

Cheque Book

A booklet of cheques provided by a bank allowing the account holder to pay others by writing cheques.

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, typically including a balance sheet, income statement, and cash flow statement.

BAT Model

A theoretical framework for analyzing the behavior, attitudes, and techniques necessary for effective leadership or managerial performance.