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Management · Q16

Financial Management

Graduate and Post Graduate · Management · question 16

Q16

Operating leverage measures ____________.

A.
business risk
Answer
B.
financial risk
C.
both risks
D.
production risk

Answer: Option A

Solution

Answer: Option A
Solution:
Operating leverage measures a company’s fixed costs as a percentage of its total costs. It is used to evaluate the break-even point of a business, as well as the likely profit levels on individual sales.