If a Company Would Like to Increase Its Degree of Operating

question 197

Multiple Choice

If a company would like to increase its degree of operating leverage it should:

• A)increase its inventories relative to its receivables
• B)increase its receivables relative to its inventories
• C)increase its variable costs relative to its fixed costs
• D)increase its fixed costs relative to its variable costs

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Definitions:

General Ledger

A comprehensive record of all financial transactions that occur within a business, sorted by account.

T-account

A graphical representation of a ledger account that outlines the effects of transactions on a specific account, used in double-entry bookkeeping.

Transactions

Financial interactions or exchanges between two or more parties, often involving the transfer of goods, services, or funds.

Investing Activity

Refers to buying and selling long-term assets and other investments, a key part of a company's cash flow statement.