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Ms. Trinh is about to start a unit on sharks. Some of her students have a strong interest in sharks and know a lot about them. Others know very little about sharks. When Ms. Trinh gives a reading assignment about sharks, she should expect that:
Operating Income
Operating income, also known as operating profit or Earnings Before Interest and Taxes (EBIT), is a measure of the profit a company generates from its operations, before subtracting interest expenses and taxes.
Fixed Costs
Expenses that do not change with the level of production or sales, such as rent and salaries.
Variable Cost
Costs that vary directly with the level of production or the volume of output.
Operating Leverage (DOL)
A financial metric indicating the proportion of fixed versus variable costs a company has, which affects its earnings before interest and taxes (EBIT) for every percentage change in sales.
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