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Why does the degree of operating leverage change as the quantity sold increases?
Operating leverage decreases as output increases because fixed costs are decreasing in relative importance and variable costs are increasing in relative importance as output rises. Thus, the degree of operating leverage is declining.
Can the value of degree of operating leverage negative?
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.
Explain why operating leverage decreases as a company increases sales and shifts away from the break even point?
"Explain why operating leverage decreases as a company increases sales and shifts away from the break-even point."
What are personal determinants?
There are many determinants of personality. These determinants are largely dependent on the environment that a child grows up in.
Basic determinants of investment?
The immediate determinants of investment are: (a) the expected rate of return and (b) the real rate of interest.
Operating leverage results from what?
Operating leverage generally refers to revenues growing faster than expenses. This would be positive leverage. Companies with a largely fixed expense base have a lot of operating leverage (in both directions). If revenues are growing but expenses are flat, operating margins increase (positive operating leverage). If revenues decrease while expenses remain flat, operating margins decrease (negative operating leverage).
What is combined leverage?
Combined leverage is the combined result of operating leverage and financial leverage.
Difference between operating leverage and financial leverage?
operating leverage is related to the investiment which is runing the business as finacial leverage related to the total equity minus laibalities .
What is the primary determinants of a firm's value?
- shareholder's wealth - growth - dividend-payout ratio - leverage -
How does operating leverage differ in manufacturing services and e-commerce companies?
how does operating leverage differ in manufacturing services and e-commerce companies? how does operating leverage differ in manufacturing services and e-commerce companies?
What is par value?
operating leverage
How operating leverage and degree of operating leverage are related?
The two are important in gauging if the business is making any meaningful growth in its services.
What is composite leverage?
Composite leverage equals financial leverage times operating leverage. Composite leverage is used to calculate the combined effect of operating and financial leverages. Leverage is the ratio of a company's debt to its equity.
What are the key determinants of a financial structure?
financial ratios
Why does the degree of operating leverage change as the quantity sold increases?
Operating leverage decreases as output increases because fixed costs are decreasing in relative importance and variable costs are increasing in relative importance as output rises. Thus, the degree of operating leverage is declining.
What are the key determinants of the future magnitude of marine and terrestrial carbon skins?
The key determinants of the future magnitude of marine and terrestrial carbon skins are longline fishing and coal formation.
What does risk taking have to do with the use of operating and financial leverage?
Operating leverage---the use of fixed resources Financial leverage---the use of debts Both operating and financial leverage imply that the firm will employ a heavy component of fixed cost resources. This is inherently risky because the obligation to make payments remains regardless of the condition of the company or the economy.
