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. |
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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