Question
*Please help with a good explanation, not repeating or copying from previous post.* Thank you. Companies often use leverage to augment profits. Based on what
*Please help with a good explanation, not repeating or copying from previous post.* Thank you.
Companies often use leverage to augment profits. Based on what you learned this week, please explain the following in detail:
With regards to Operating Leverage, please explain why a company with HIGH Operating Leverage faces greater financial risk in a declining sales period compared to a company with LOW Operating Leverage. (HINT: The key here is the relation between fixed costs and variable costs.)
What does a business's Contribution Margin represent? What does the Contribution Margin have to do with Operating Leverage?
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