Firms have no control over their level of operating leverage.

Question

Quizplus · Accepted Answer

Firms can control their level of operating leverage by making changes to their cost structure and production processes. For example, they can invest in more efficient equipment to lower their fixed costs, or outsource certain functions to reduce their variable costs. By doing so, they can increase or decrease their operating leverage, which refers to the degree to which their net income changes in response to a change in sales volume.

Firms Have No Control Over Their Level of Operating Leverage