1) Economic conditions are not factors influencing decisions on maintaining conservative or leveraged positions

Select one:

True

False

2) Cash Break-Even Analysis deals with cash flows rather than accounting flows

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True

False

3) The Degree of Operating Leverage (DOL)DOL equals the Percent change in operating income divided by the Percent change in unit volume

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True

False

4) The closer the DOL (Degree of Operating Leverage) is to the firms break-even point, the higher the number will be!

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True

False

5) One of the limitations of the analysis of operating leverage is that it assumes the existence of a constant or linear function for revenues and costs as volume changes; this may not be constant in the real world.

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True

False