In a company with low operating leverage
A)fixed costs are high and variable costs are low.
B)small increases in sales lead to large increases in operating income.
C)there is a higher possibility of net loss than a higher-leveraged firm.
D)less risk is assumed than in a highly leveraged firm.
E)companies follow the strategy of replacing variable costs with fixed costs.

Question

Quizplus · Accepted Answer

In a company with low operating leverage, fixed costs are low and variable costs are high, which means less risk is assumed compared to a highly leveraged firm.

In a Company with Low Operating Leverage