Calculating Operating Leverage

question 22

Multiple Choice

Calculating operating leverage. Potter Company has a degree of cash flow operating leverage equal to 1.266. If the company's EBITDA was $1,500 last year while its depreciation and amortisation expense was $100 in the same year, then what was the company's degree of accounting operating leverage?

• A) 1.29
• B) 1.33
• C) 1.36
• D) 1.39

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Definitions:

Exorbitant Rates

Charges or fees that are much higher than what is considered reasonable or fair.

Puritans

Puritans were members of a group of English Protestants in the 16th and 17th centuries who sought to "purify" the Church of England from its "Catholic" practices.

Church of England

The primary state church in England, also known as the Anglican Church, characterized by a middle path (via media) between Roman Catholicism and Protestantism.

Political Interference

Involvement by political authorities in matters or decisions that typically require a degree of independence from governmental influence or control.