Multiple Choice
Operating leverage refers to
A) financing a portion of the firm's assets with securities bearing a fixed rate of return.
B) the additional chance of insolvency borne by the common shareholder.
C) the incurrence of fixed operating costs in the firm's income stream.
D) a high degree of variable costs of production.
Correct Answer:
Verified
Correct Answer:
Verified
Q34: If a firm has no operating leverage
Q35: The independence hypothesis suggests that the total
Q36: All of the following are likely to
Q37: The optimal capital structure occurs when operating
Q38: Depreciation is considered a fixed cost.
Q40: Break-even analysis assumes that a multiproduct firm
Q41: A company that sells common stock and
Q42: Describe the sources of business risk.
Q43: Borrowing funds using short-term debt,such as commercial
Q44: Operating leverage is easier to control and