Companies with low operating leverage have relatively higher variable costs and lower fixed costs.

Question

Quizplus · Accepted Answer

This is because operating leverage refers to the proportion of fixed costs to variable costs in a company's cost structure. Companies with low operating leverage have a smaller proportion of fixed costs and a larger proportion of variable costs, which allows them to be more flexible in adjusting their costs to changes in sales volume.

Companies with Low Operating Leverage Have Relatively Higher Variable Costs