Operating leverage is a measure of the: a. Sensitivity of net earnings to changes in operating earnings.

Question:

Operating leverage is a measure of the:

a. Sensitivity of net earnings to changes in operating earnings.

b. Sensitivity of net earnings to changes in sales.

c. Sensitivity of fixed operating costs to changes in variable costs.

d. Sensitivity of earnings before interest and taxes to changes in the number of units produced and sold.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals of corporate finance

ISBN: 978-0470876442

2nd Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

See More Books

Question Posted: Jun 12, 2012 12:55 AM

See More Questions

The "expense ratio" is a measure of the cost of managing the portfolio. Investors prefer a low expense ratio, all else equal. Below are expense ratios for 23 randomly chosen stock funds and 21...
The Head Injury Criterion (HIC) is a measure of the likelihood of an injury arising from an accident such as a vehicle crash. At an HIC of 1000, one in six people will suffer a life-threatening...
The consumer price index (CPI) is a measure of the average change in prices over time in a fixed market basket of goods and services typically purchased by consumers. One of the items in this market...
Suppose Nordic Boots was making production decisions for the following six boots: ot Price E(Demand) Std. Dev (Demand) Co Cu Exp. Profit Max. Profit A 220 1000 400 35.2 52.8 1101 39201 52800 230 2000...
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees,...
Optimistic Enterprises, Inc. (OEI) has developed and patented a product for the home entertainment industry. Some industry experts predict that in two to five years the market for this technology...
True or False. Completely randomized design is a balanced LO4 design.
The financial statements for Castile Products, Inc., are given below: Account balances at the beginning of the year were accounts receivable, $25,000; and inventory, $60,000. All sales were on...
Instruction: Indicate where or in what section the accounts below will appear in the balance sheet. cal order
A scientist is rolling a die which has six possible outcomes. He is comparing the expected values of each number to see if the die is equally weighted. The Chi-squared value of his experiment is...
Hermann Corporation is considering an investment of $375 million with expected after-tax cash inflows of $115 million per year for seven years and an additional after-tax salvage value of $50 million...
The Fulcrum Company produces decorative swivel platforms for home televisions. If Fulcrum produces 40 million units, it estimates that it can sell them for $100 each. The variable production costs...
A Ltd. which sells a product on hire-purchase terms has the following transactions for the year ending on December 31, 2017. The gross profit is 25% on selling price (figures in ): You are required...
Read the buret (burette) volume and report your reading with the proper number of digits. Number 3.2 mL mL 0 10 15 46 20 25 30 35 47 40 48 Incorrect.
TCP Congestion Control using Wireshark and testmy.net. Identify the IP Address, Protocol (UDP or TCP), Destination and Source IP Address, and IP Class Type (A-D).
Charley & Waldo's World of Wonder is a science-oriented children's museum. The museum has a "free" section where children have unlimited use science oriented exhibits and a premium section where...
Let f(x) In(x). Solve each of the following equations exactly for a. (f(x)) = 11 b. f(x) = 11 c. f(x) = 11
Suppose the annual rate of inflation in Taiwan is 6.66%, and the annual rate of inflation in Mexico is 5.99%. If the Mexican peso depreciates relative to the Taiwan dollar by 4% in real terms, then...
(EUP; cost per EUP; weighted average) Ouch! manufactures canisters of mace. On August 1, 2006, the company had 9,800 units in beginning Work in Process Inventory that were 100 percent complete as to...
Select a mass spectrometric technique with the highest mass resolution for identifying an unknown compound being eluted from a liquid chromatography column
1. Find the derivatives of the following functions: 2. If Hence show that (a) In(8x) (b) In(3x-2) (c) x In(2x)
In the chapter, we mentioned that many companies have been under pressure to declassify their boards of directors. Why would investors want a board to be declassified? What are the advantages of a...
In the chapter, we mentioned that many companies have been under pressure to declassify their boards of directors. Why would investors want a board to be declassified? What are the advantages of a...
What are the difficulties in using the PE ratio to value stock?
The cost of partially completed goods at the end of the period would be Ending work in process inventory Cost of goods sold Beginning finished goods inventory Beginning work in process inventory
At a 3% (EAR) rate of interest, you will quadruple (increase four folds) your money in approximately ____ years.
Smile Company makes baked goods. The budgeted sales are $620,000, budgeted variable costs are $260,400, and budgeted fixed costs are $237,800. What is the budgeted operating income?

Operating leverage is a measure of the: a. Sensitivity of net earnings to changes in operating earnings.

Question:

Step by Step Answer:

d is correct Operating leverage is the sensitivity of ...View the full answer

Fundamentals of corporate finance

Students also viewed these Corporate Finance questions