A Firm with High Operating Leverage Is Best Defined as a Firm

question 76

Multiple Choice

A firm with high operating leverage is best defined as a firm that has

• A)a high debt-to-equity ratio.
• B)high fixed costs relative to variable costs.
• C)a low,relatively stable beta.
• D)high variable costs relative to fixed costs.
• E)a high sales/assets ratio.

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Definitions:

Merchandise Returns

Merchandise returns are transactions in which customers return previously purchased goods to the seller, usually for a refund or store credit.

Collection Efforts

The process of pursuing payments of debts owed by individuals or businesses.

Receiving Cash

The process involving the collection or receipt of cash in a business transaction.

Not Satisfied

A term indicating that expectations, requirements, or conditions have not been met to an adequate degree.