At its current level of sales, a company has a degree of operating leverage of 6. This means that a 10% increase in sales would result in a:

Name: At its current level of sales, a company has a degree of operating leverage of 6. This means that a 10% increase in sales would result in a:
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Question

Quizplus · Accepted Answer

The degree of operating leverage indicates how a percentage change in sales will affect profits. With a leverage of 6, a 10% increase in sales would lead to a 60% increase in before-tax profit (10% * 6 = 60%).

At Its Current Level of Sales, a Company Has a Degree