The Higher a Project's Operating Leverage, _____

question 74

Multiple Choice

The higher a project's operating leverage, _____.

• A) the lower the sensitivity of EBIT to changes in revenue
• B) the greater the sensitivity of EBITDA to changes in revenue
• C) the lower the sensitivity of net profit to changes in variable costs
• D) the greater the sensitivity of net profit to changes in variable costs

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Definitions:

Liable

Being legally responsible or obligated.

Sarbanes-Oxley Act

A U.S. federal law that aims to protect investors by making corporate disclosures more reliable and accurate, enhancing financial transparency and accountability.

Audit Committee

A subcommittee of a company's board of directors responsible for overseeing financial reporting, audit processes, and compliance with laws and regulations.

Public Accounting Firm

A business organization that provides auditing, tax, consulting, and financial advisory services to clients.