The measurement of the impact of change in purchase spend on a firm profit before taxes,assuming gross sales and other expenses remain unchanged,is referred to as:
A)Break-Even Analysis
B)Direct Offset
C)Profit-Leverage Effect
D)Leveraging Purchase Volume

Question

Quizplus · Accepted Answer

The profit-leverage effect measures the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged. It helps to determine how changes in purchasing can affect a company's overall profitability. Break-even analysis refers to the point at which a company's total revenue equals its total expenses, and direct offset and leveraging purchase volume are not commonly used terms in finance.

The Measurement of the Impact of Change in Purchase Spend