You can have a high degree of operating leverage (DOL) and still have low business risk. Why?

Question:

You can have a high degree of operating leverage (DOL) and still have low business risk. Why? By the same token, you can have a low DOL and still have high business risk. Why?

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

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals Of Financial Management

ISBN: 9780273713630

13th Revised Edition

Authors: James Van Horne, John Wachowicz

See More Books

Question Posted: Dec 07, 2015 05:48 AM

See More Questions

Is it possible for a firm to have a high degree of operating leverage and a low level of business risk? Explain.
Stephen Scott recently joined the Finance and Planning Division of the Carrigan Bank (Bassillo) Limited as an assistant chief financial officer (CFO). Scott is a certified management accountant and...
Stephen Scott recently joined the Finance and Planning Division of the Carrigan Bank (Bassillo) Limited as an assistant chief financial officer (CFO). Scott is a certified management accountant and...
The Sellinger Business School's Information Technology Service (ITS) is considering a new process to refurbish older computers in order to save on costs of buying new computers. The five steps to the...
Anthonys Consulting, Inc. started business in 2013 with total assets of $32,000 and total liabilities of $14,000. At the end of 2013, Anthonys total assets were $42,000 and total liabilities were...
You are the accountant for a division of a company that is constructing a building for its own use. It is January 2008, and you are working on closing the books for 2007. The CEO of the division...
Understand how the marketing mix works. LO.1
Missoula Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by...
3 pts Question 7 Alice Cummings is an excellent salesperson and earned $97,000. She paid $17,000 for "necessities" such as mortgage, food, and clothing. Her state and federal income taxes totaled...
The following rates were observed for a first-order, irreversible reaction, carried out on a spherical catalyst: dp = 0.625 cm robs=0.09 mol/gcat.hr dp = 0.10 cm Tobs = 0.275 mol/gcat.hr Strong...
Your friend, Jacques Fauxpas, suggests, "Firms with high fixed operating costs show extremely dramatic fluctuations in operating profits for any given change in sales volume." Do you agree with...
Define financial leverage and the degree of financial leverage (DFL). How are the two related?
A large cube of glass has a metal reflector on one face and water on an adjoining face (Fig. 33.52). A light beam strikes the reflector, as shown. You observe that as you gradually increase the angle...
MAT 152 Project 3: MLB Team Salaries The data set below is the total salary of each Major League Baseball (MLB) team salaries per team in 2016. Find the probabilities for normal distributions and...
deficit, surplusincreased, decreased$795, $1,975, $54,635, $35 6. Cash-flow statement Sam and Joan Wallingford have been married for two years. They have been trying to save but feel that there is...
Trudy bought the vacant lot adjacent to her house and planted a large garden there. The garden produces more vegetables than her family needs, and Trudy earns some extra cash by selling them at a...
Requirements Medical researchers once conducted experiments to determine whether Lisinopril is a drug that is effective in lowering systolic blood pressure of patients. Patients in a treatment group...
1. Balroop while looking for Gurjap walks 315m [N] toward the forest, then 133 m [28 S of E] through it, and finally finds him deep inside the forest after walking another 55 m [ 31 S of W]....
Which of the following events must be reported to the SEC under the reporting provisions of the Exchange Act? a. Tender offers b. Insider trading c. Director resolutions d. A and B e. A, B, and C
An item of depreciable machinery was acquired on 1 July 2009 for $120,000 by cash It is expected to have a useful life of 10 years and zero salvage value On 1 July 2012, it was decided to revalue the...
Suppose that we are trying to value a three-period call option on a stock that will either go up by 7 percent or down by 4 percent per period, that the exercise price of the option is $35, that the...
In his preliminary cash budget, Barnes has assumed that all sales are collected and, thus, that SKI has no bad debts. Is this realistic? If not, how would bad debts be dealt with in a cash budgeting...
Barnes?s cash budget for the entire year, although not given here, is based heavily on his forecast for monthly sales. Sales are expected to be extremely low between May and September but then...
Is there any reason to think that SKI may be holding too much inventory? If so, how would that affect EVA and ROE? Discuss.
Question 24 Not yet answered Marked out of 1.00 P Flag question Muscat LLC's current assets and current liabilities are OMR 258,000 and OMR 192,000, respectively. In the year 2020, the company earned...
Question 24 Miami Company sold merchandise for which it received $710,400, including sales and excise taxes. All of the firms sales are subject to a 6% sales tax but only 50% of sales are subject to...
f the IRS intends to close a Taxpayer Assistance Center, they must notify the public at least _____ days in advance of the closure date. 14 30 60 90

You can have a high degree of operating leverage (DOL) and still have low business risk. Why?

Question:

Step by Step Answer:

You can have a high DOL and still have low ...View the full answer

Fundamentals Of Financial Management

Students also viewed these Finance questions