If a Company Has a Degree of Operating Leverage of 4.0

question 39

True/False

If a company has a degree of operating leverage of 4.0, that means a 10% increase in sales will result in a 40% increase in operating income.

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Definitions:

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when entrusted with care of their assets or interests.

Dissolution

The act of formally ending or disbanding an entity or agreement, such as dissolving a corporation or marriage.

Liquidation

The process of converting a company's assets into cash to pay off creditors before dissolving the business.

Takeover

The acquisition of control over a company by another company or investor group, typically through the purchase of its shares.