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:

Policies

Principles or rules established by organizations, governments, or groups to guide decisions and achieve rational outcomes.

Policies

Guidelines or principles that direct actions towards specific goals or objectives, often set by governments, organizations, or institutions.

Individual Transferable Quotas (ITQs)

Limits (quotas) set by a government or a fisheries commission on the total number or total weight of a species that an individual fisher can harvest during some particular time period; fishers can sell (transfer) the right to use all or part of their respective individual quotas to other fishers.

Tragedy of the Commons

A situation in which individuals act according to their own self-interest regarding a shared resource, depleting or spoiling that resource through their collective action.