Variability in earning numbers:
A)is desirable as it increases variance of earnings and hence value of stock options.
B)increases if a company decreases its operating expenses.
C)increases if a company decreases its financial leverage.
D)is independent of operating leverage.

Question

Quizplus · Accepted Answer

Variability in earnings increases if a company decreases its operating expenses because lower operating expenses can lead to higher net income, assuming revenues remain constant, thus increasing the potential variability in earnings.

Variability in Earning Numbers