Which of the following phrases make the statement false? As a firm increases its operating leverage for a given quantity of output, this:
A)decreases its financial leverage
B)changes its operating cost structure
C)increases its business risk
D)increases the variability on earnings per share

Question

Quizplus · Accepted Answer

Increasing operating leverage does not decrease financial leverage; they are separate concepts. Operating leverage relates to the proportion of fixed costs in a company's cost structure, while financial leverage involves the use of debt.

Which of the Following Phrases Make the Statement False? as a Firm