The Following Chart Shows the Similarities Between Operating Leverage and Financial

question 47

True/False

The following chart shows the similarities between operating leverage and financial leverage:
$\begin{array}{|l|l|l|}\hline & \text { Operating Leverage } & \text { Financial Leverage } \\\hline \text { Risk Relationship } & \text { Amplifies present } & \text { Creates and amplifies } \\\hline & \text { business risk } & \text { financial risk } \\\hline\\\hline & \text { Substitutes fixed costs } & \text { Substitutes fixed return } \\\hline \text { Cash outflows } & \text { for variable costs in } & \text { debt for variable return } \\\hline & \text { cost structure } & \text { equity in capital structure }\\\hline\end{array}$