If Company a Has a Higher Degree of Operating Leverage

question 125

Multiple Choice

If company A has a higher degree of operating leverage than company B,then which of the following statements is true?

• A) Company A has higher variable expenses.
• B) Company A's profits are more sensitive to percentage changes in sales.
• C) Company A is more profitable.
• D) Company A is less risky.

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Definitions:

Ethics

A branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong behavior.

Great Spirit

A concept found in some Native American cultures, often referring to a supreme deity or a pervasive, spiritual force in the universe.

Aesthetic Pleasure

The satisfaction or enjoyment derived from perceiving, appreciating, or engaging with beauty, art, or entities that evoke sensory or emotional values.

Wuwei

(Chinese.) Literally, nonaction. The ideal of nonassertion in one’s actions.