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

Question

Quizplus · Accepted Answer

Companies with low operating leverage have relatively lower fixed costs and higher variable costs. This means that their costs are more directly tied to their production or sales volume, and they have less financial risk if sales decrease. In contrast, companies with high operating leverage have higher fixed costs and lower variable costs, meaning their costs are less tied to production or sales volume, but they have more financial risk if sales decrease.

Companies with Low Operating Leverage Has Relatively Lower Variable Costs