Busıness Fınance I Deneme Sınavı Sorusu #1398865

Which one below is about the Degree of Operating Leverage of the factors that make Beta a firm?


Products/services that are more discretionary tend to have higher betas because they more affected by economic conditions.

Luxury goods and higher priced goods tend to be more cyclical compared to food and other necessities.

Companies with higher levels of debt are able to magnify the returns to their stockholders.

High operating leverage means that fixed costs have a high proportion within total costs.

It leads to large reductions and even losses when profits fall.


Yanıt Açıklaması:

Degree of Operating Leverage. High operating leverage means that fixed costs have
a high proportion within total costs. High fixed cost proportion will lead to poor performance in bad times but very good performance in good times.

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