18. Operating leverage (S10.2) What is the lowest possible value for the degree of operating leverage for

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18. Operating leverage (S10.2) What is the lowest possible value for the degree of operating leverage for a profitable firm? Show with a numerical example that if Modern Artifacts (see Problem 12) has zero fixed costs and zero depreciation, then DOL = 1 and, in fact, sales and profits are directly proportional, so a 1% change in sales results in a 1% change in profits.

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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