If a Company Has Very Low Operating Leverage (I

question 49

Multiple Choice

If a company has very low operating leverage (i.e.,a low proportion of fixed costs in the cost structure) and no changes are expected in operations:

• A) percentage change income statement percentages can serve as the basis for projecting operating expenses.
• B) using common-size income statement percentages will overstate future projected operating expenses.
• C) using common-size income statement percentages will understate future projected operating expenses.
• D) using common-size income statement percentages can serve as a reasonable basis for projecting future operating expenses.

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Definitions:

Long-Term Human Orientation

An approach that emphasizes the importance of long-term relationships, sustainability, and ethical treatment of individuals within organizational or social contexts.

Social Relationships

Connections between individuals that are influenced by social networks, norms, and interactions.

Justifications

Reasons or explanations provided to support or rationalize decisions, actions, or beliefs.

New Values

The development or adoption of beliefs, principles, or standards that differ from existing ones, reflecting changes in societal, organizational, or individual perspectives.