Question
Which one of the following statements is FALSE regarding operating leverage? a) A company that has a high DOL has a high business risk. b)
Which one of the following statements is FALSE regarding operating leverage?
a) A company that has a high DOL has a high business risk.
b) DOL is a measure of sensitivity of a firm's EBIT to a change in sales.
c)The higher the DOL, the closer the company to its break-even point.
d) Operating leverage mainly focus on the use of variable operating costs by a company.
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Finance for Executives Managing for Value Creation
Authors: Gabriel Hawawini, Claude Viallet
4th edition
9781133169949, 538751347, 978-0538751346
