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yes, the degree of operating leverage can be negative. It can be in case of counter cyclical companies. Most of the airline companies generally have negative DOL.
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What is buzz value?
The noun buzz value is a marketing term for the word-of-mouth interaction of the public for a particular advertising campaign or product. The buzz value can be positive or negative.
What is intrinsic value of a stock?
The present value of the operating cash flow stream (Net Operating Profit After Tax minus change in Total Capital) discounted at the sector's or company's Cost of Capital. Changes in the circumstances surrounding a company's business, whether from competitors, governments, customer preferences or a management's strategy, can radically alter the expectations of future operating cash flows and/or the systemic or company-specific cost of capital.
What is negative inflation?
Negative inflation means that the economy is in a deflationary period. That is, there is less money (supply of money) chasing the same amount of goods and services, leading to the increase in the value of the money.
What is economic value added EVA?
Economic Value Added is the value added by management to the capital provided by shareholders. It is a period value. EVA is defined as net operating profit after tax less a capital charge reflecting the firm's cost of capital.For instance, assume a company has net operating profits after taxes of $1,000,000 for the year, Net Capital of $500,000 and cost of capital of 12%. The capital charge would be determined by multiplying the cost of capital times the net capital - in this case 12% times $500,000 for a capital charge of $60,000.The charge would be deducted from the net operating profits after taxes after taxes - $1,000,000 - $60,000. Therefore, the EVA for that year would be $940,000.
Explain briefly the traditional view of the relationship between the capital structure and the value of the firm?
The traditional view of a firms capital structure is the process of increasing goodwill value of the firm, while limiting the use of capital expenses and controlling capital costs. The first achieves this through materializing its limited finances through financial leverage.
What is par value?
operating leverage
What is the meaning of operating leverage describe it?
Operating leverage is the degree to which cost within a company is fixed. Fixed costs are costs that do not vary with sales. For example, the salary of a manager on a contract is fixed; that is regardless of the production level of a company the manager's pay would not change. Another example is rent, regardless of how much items are sold the rent for a store does not change. With this said, a company with a high operating leverage (in other words high fixed cost) have a high risk because it magnifies the effects of profit depending on sales. This could be measured by computing the degree of operating leverage (DOL) which is the percentage change in profit given a 1 percent change in sales.An example from my Finance textbook (Fundamentals of Corporate Finance) shows a nice table that compares a high fixed cost company (high operating leverage) with a high variable cost company (low operating leverage) given different states of sales. So the following table is a replication of that table and not my own.High Fixed Cost (High Operating Leverage)High Variable Cost(Low Operating Leverage)Sales:SlumpNormalBoomSlumpNormalBoomSales130001600019000130001600019000- VC105631300015438109201344015960- FC200020002000156015601560- Dep.450450450450450450= Profit-135501112705501030VC = variable cost; FC = fixed cost; Dep = deprecation; Profit = before taxAs you can see that with a high operating leverage, the changes from a $3000 change in sales is more than the change from a company with a low operating leverage. This could be captured through DOL as well.DOL = (% change in profits) / (% change in sales)Where % change = (New value - old value) / (old value)If we look at the normal to boom situations:For the high fixed cost the percentage change in profits is 102.20% and the percentage change in sales is 18.75% DOL is as followed:DOL = 102.20/ 18.75 = 5.45For the high variable company the percentage change in profits is 87.30% and the percentage change in sales is 18.75% DOL is as followed:DOL = 87.30/ 18.75 = 4.65Thus the higher the DOL the more fixed cost a company has and the more risk it assumes if the sales slump. But it also means that when sales boom, the higher operating leveraged company will profit merrily!
Can the magnitude of a vector have a negative value?
The magnitude of a vector is always treated as non negative and the minus sign indicates the reversal of that vector through an angle of 180 degree.
What is the value of negative 9?
negative nine is the value of negative nine
What is net service revenue?
A company's operating income after operating expenses are deducted, but before income taxes and interest are deducted. If this is a positive value, it is referred to as net operating income, while a negative value is called a net operating loss (NOL).Read more: http://www.investopedia.com/terms/n/noi.asp#ixzz25SVTz0Zf
What is a negative value?
A value that is negative, e.g., -5.
What does a negative add a positive equal?
If the absolute value of the negative is bigger than that of the positive, then the answer is negative. If the absolute value of the negative is the same, then zero. If the absolute value of the negative is smaller, then positive. Absolute value is the value ignoring the sign.
Does a positive value multiplied by a negative value equal a positive?
No, the product of the multiplication of a positive and a negative value is negative.
Will a negative number to the fifth power be a positive or negative value?
The result will be a negative value.
Can an absolute value equal a negative?
An absolute value can not be negative.
Does a negative value multiplied by a negative value eguals a negative?
No, like signs multiply to positive, unlike to negative.
A positive number minus a negative number is?
If negative value>positive value then result is -ve If positve value>negative value then result is +ve
