Q221
Which of the following is the expression for operating leverage?
A.
Contribution/EBIT
AnswerB.
EBT/Contribution
C.
Contribution/EAT
D.
Contribution/Quantity
Answer: Option A
Solution
Answer: Option A
Solution:
Contribution/EBIT is the expression for operating leverage. Operating leverage is a cost-accounting formula that measures the degree to which a firm or project can increase operating income by increasing revenue.