Operating leverage has to do with A. financing with fixed cost sources of capital. B. the incurrence of fixed operating costs in the firm's income stream. C. using preferred stock to increase sales volume. D. borrowing money to finance a firm's growth.

Question

Business

Jaxon Leach

27 June, 15:32

Operating leverage has to do with A. financing with fixed cost sources of capital. B. the incurrence of fixed operating costs in the firm's income stream. C. using preferred stock to increase sales volume. D. borrowing money to finance a firm's growth.

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Answers (1)

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Tania Bailey · Answer 1

The correct answer is B

Explanation:

Operating leverage is the term which is defined as the measure or the degree to which the project or the firm could increase the operating income by increasing the revenue.

Business which generate or create sales with the high gross margin and the low variable cost will have the high operating leverage.

It deals with the incurrence of the fixed cost in the firm or the business income stream.