Operating Leverage Exists When

question 43

Multiple Choice

Operating leverage exists when:

• A) a company utilizes debt to finance its assets.
• B) management buys enough of the company's shares of stock to take control of the corporation.
• C) the organization makes purchases on credit instead of paying cash.
• D) small percentage changes in revenue produce large percentage changes in profit.

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Definitions:

Monthly Installment

A periodic payment made towards the repayment of a loan or debt over a fixed period.

Disaffirmed

Rejected or declared void, often referring to the cancellation of a contract or agreement.

Minority

A group within a society distinguished from the majority by racial, religious, ethnic, or cultural identity, often facing differential treatment or marginalization.

Ratification

The act of formally approving an agreement or contract, making it officially valid.