In a Company with Low Operating Leverage

question 75

Multiple Choice

In a company with low operating leverage

• A)fixed costs are high and variable costs are low.
• B)small increases in sales lead to large increases in operating income.
• C)there is a higher possibility of net loss than a higher-leveraged firm.
• D)less risk is assumed than in a highly leveraged firm.
• E)companies follow the strategy of replacing variable costs with fixed costs.

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Definitions:

Population

The entire pool from which a statistical sample is drawn and to which the results of analysis will be generalized.

Finite Population Correction Factor

The term \( \frac{(N - n)}{(N - 1)} \) that is used in the formulas for s_x and s_p whenever a finite population, rather than an infinite population, is being sampled. The generally accepted rule of thumb is to ignore the finite population correction factor whenever n/N ≤ .05.

Standard Error

The standard deviation of the sampling distribution of a statistic, most commonly of the mean.

Computing

Computing refers to the process of utilizing computer technology to complete a task or solve problems.