Operating Leverage Determines How Income from Operations Is to Be

question 19

True/False

Operating leverage determines how income from operations is to be divided between debt holders and stockholders.

---

Definitions:

Net Operating Income

The profit generated from a company's everyday operations, calculated by subtracting operating expenses from operating income.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating the amount contributing to covering fixed costs and generating profit.

Contribution Margin

The amount of revenue from sales that exceeds variable costs, contributing to covering fixed costs and generating profit.

Dollar Sales Volume

The total revenue generated from the sale of goods or services, expressed in monetary terms.