Calculating Operating Leverage

question 25

Multiple Choice

Calculating operating leverage. Marvelous Corporation has a degree of cash flow operating leverage equal to 1.25. If the firm's EBITDA was $1,000 last year while its depreciation and amortization expense was $50 in the same year, then what was the firm's degree of accounting operating leverage?

• A) 1.26
• B) 1.30
• C) 1.32
• D) 1.35

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Definitions:

Limited Temporary Basis

A situation or condition that is imposed for a short duration with restrictions on scope or extent.

Exchange of Money

The process of exchanging money between individuals as compensation for products or services.

Final Stage

Refers to the last phase in a process or project, often indicating the completion of planned activities or the final steps before reaching a goal.

Personal Selling

A direct form of marketing where a salesperson personally communicates with potential customers to sell goods or services.