If company A has a higher degree of operating leverage than company B, then: Multiple Choice company A is more profitable. company A's profits are more sensitive to percentage changes in sales. company A's variable expenses are high. company A is less risky.

If company A has a higher degree of operating leverage than company B, then: Multiple Choice company A is more profitable. company A's profits are more sensitive to percentage changes in sales. company A's variable expenses are high. company A is less risky.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 44MCQ: When a Dupont analysis reveals that a company has much higher than average asset turnover and much...

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Concept explainers

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.

Question

If company A has a higher degree of operating leverage than company B, then:

Multiple Choice

company A is more profitable.
company A's profits are more sensitive to percentage changes in sales.
company A's variable expenses are high.
company A is less risky.

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