Discussion about operating leverage and risk


Question: Which of the following statements about Operating Leverage and Risk from the lecture are TRUE: Someone with relatively low fixed costs and high variable costs will have a high level of operating leverage and a high risk of making a large loss if their income falls. Someone with relatively high fixed costs and low variable costs will have a low level of operating leverage and a low risk of making a large loss if their income falls. Question Answer Neither of the statements are true (both are false) Only statement 1 is true Only statement 2 is true Both statements are true (neither are false)

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Accounting Basics: Discussion about operating leverage and risk
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