For a Given Level of Sales,a Low Contribution Margin Ratio

question 85

True/False

For a given level of sales,a low contribution margin ratio will produce less net operating income than a high contribution margin ratio.

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Definitions:

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, usually with interest.

Equity

The value of an ownership interest in property, including shareholders' ownership in a corporation.

EPS

Earnings Per Share, a financial ratio that measures the amount of net income earned per share of stock outstanding.

Operating Leverage

A measure of how much a company can increase its operating income by increasing revenue, indicating the ratio of fixed costs to variable costs.