In a Company with Low Operating Leverage

question 160

Multiple Choice

In a company with low operating leverage:

• A)less risk is assumed than in a highly leveraged firm.
• B)fixed costs are high and variable costs are low.
• C)large changes in sales volume result in small changes in net profit.
• D)there is a higher possibility of net loss than a higher-leveraged firm.

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Definitions:

Purpose

The reason for which something is done or created, or for which something exists; the goal or intended outcome of an action.

Passion

A powerful or compelling emotion or feeling, often referring to a strong enthusiasm or desire for something.

Business

A structured effort by individuals to produce and sell, for a profit, the goods and services that satisfy society's needs.

Creation

The act of bringing something new into existence, either through innovation or artistic expression.