Which Is Better: a Higher or Lower Degree of Operating

Multiple Choice

Which is better: a higher or lower degree of operating leverage?

A) Higher because it leads to higher profits.
B) Lower because it requires fewer units sold to break even.
C) Higher because the amount by which a company's sales can decline before losses are incurred is higher.
D) Lower because the impact on net operating income of a given dollar change in sales is higher.
E) It depends on the level of risk a company is comfortable with.