All other things being equal, an increase in the amount fixed operating costs for a firm would:
A) increase the degree of financial leverage
B) decrease the degree of financial leverage
C) have no impact on degree of financial leverage
D) not enough information given

Question

Quizplus · Accepted Answer

The degree of financial leverage is related to the use of debt in the firm's capital structure, not fixed operating costs. An increase in fixed operating costs affects operating leverage, not financial leverage.

All Other Things Being Equal, an Increase in the Amount