Which of the following statements is not true?
a. Operating leverage refers to the extent to which a company's net income reacts to a given change in sales.
b. Companies that have higher fixed costs relative to variable costs have higher operating leverage.
c. When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly.
d. When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.
Answer: d. When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.
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The market-to-book ratio is determined by dividing market price by book value
Indicate whether the statement is true or false
If the goal were to increase the value of a country's currency - to fight an depreciation of the domestic currency in exchange for foreign currency - the central bank would:
A) buy its own currency in exchange for foreign currency. B) follow a expansive monetary policy. C) drive real rates of interest down. D) sell its own currency in exchange for foreign currency.