All else equal, if you decrease your level of ﬁxed costs, operating leverage will also fall.

Question

Quizplus · Accepted Answer

Operating leverage is a measure of how sensitive a company's operating income is to changes in its revenue, and it is affected by the level of fixed costs. If fixed costs are decreased, operating leverage will also decrease, meaning that the company's operating income will be less sensitive to changes in its revenue.

All Else Equal, If You Decrease Your Level of ﬁXed