The degree of operating leverage is defined as the percentage change in _____ relative to the percentage change in _____.
A) net income; fixed costs
B) net income; total revenue
C) operating cash flow; fixed costs
D) operating cash flow; total revenue
E) operating cash flow; quantity sold

Question

Quizplus · Accepted Answer

The degree of operating leverage is defined as the percentage change in operating cash flow relative to the percentage change in quantity sold. This measures how a change in sales volume will affect profits.

The Degree of Operating Leverage Is Defined as the Percentage