Homework Answers
The given data point does not follow the general trend of the rest of the data, it would be considered an outlier. But it does not influence the rest of the data.
That means, the data does not have extreme x value
Hence, we can say it as low leverage
High operating leverage means (choose one): (a) The company has relatively low fixed costs. (b) The...
High operating leverage means (choose one): (a) The company has relatively low fixed costs. (b) The company has relatively high fixed costs. (c) The company will have to sell more units than a comparable company with low operating leverage to break even. (d) The company will have to sell fewer units than a comparable company with low operating leverage to break even. (e) Both (b) and (c) are correct. (f) Both (a) and (d) are correct.
Operating Leverage. High operating leverage means: The company has relatively high fixed costs. The company has...
Operating Leverage. High operating leverage means: The company has relatively high fixed costs. The company has relatively low fixed costs. The company will have to sell fewer units than a comparable company with low operating leverage to break even. The company will have to sell more units than a comparable company with low operating leverage to break even. Both (2) and (3) are correct. Both (1) and (4) are correct.
2. Provide an example of a business or industry that has high operating leverage and one...
2. Provide an example of a business or industry that has high operating leverage and one that has low operating leverage and explain why the operating leverage is high or low in each case.
should businesses with low operating leverage use the same models to manage costs that businesses with...
should businesses with low operating leverage use the same models to manage costs that businesses with a high degree of operating leverage use?
all else being equal, a company with a high operating leverage will have All else being equal, a company with a hig...
all else being equal, a company with a high operating leverage
will have
All else being equal, a company with a high operating leverage will have relatively low risk. relatively high contribution margin ratio. relatively high variable costs. relatively low fixed costs.
Projects with high financial leverage will have higher interest expenses and lower net income than projects...
Projects with high financial leverage will have higher interest expenses and lower net income than projects with low financial leverage, thus it ( high leverage project) always ends up with a lower return. Do you agree? Why?
2. What is operating leverage? How, if at all, is it similar to financial leverage? If...
2. What is operating leverage? How, if at all, is it similar to financial leverage? If a firm has high operating leverage would you expect it to have high or low financial leverage? Explain your reasoning. Please also add to your answer an example of where an HR manager may use operating leverage to his or her advantage.
What determines if the cost of debt is high or low? How does cost of equity...
What determines if the cost of debt is high or low? How does cost of equity depend on amount of leverage?
What is meant by the term "operating leverage"? Is high operating leverage a positive or negative...
What is meant by the term "operating leverage"? Is high operating leverage a positive or negative position?
What are some potential advantages and disadvantages of operating with a high leverage and debt ratio?...
What are some potential advantages and disadvantages of operating with a high leverage and debt ratio? (7) Explain why P/E ratio and EPS are used in determining health of a stock? Is it good to have a low EPS ratio? Why or why not? (8)
2. Provide an example of a business or industry that has high operating leverage and one that has low operating leverage and explain why the operating leverage is high or low in each case.
all else being equal, a company with a high operating leverage
will have
All else being equal, a company with a high operating leverage will have relatively low risk. relatively high contribution margin ratio. relatively high variable costs. relatively low fixed costs.
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