Which of the following statements is CORRECT? As a firm increases the operating leverage used to produce a given quantity of output, this will A) normally lead to an increase in its fixed assets turnover ratio. B) normally lead to a decrease in its business risk. C) normally lead to a decrease in the standard deviation of its Expected EBIT. D) normally lead to a decrease in the variability of its expected EPS. E) normally lead to a reduction in its fixed assets turnover ratio.

Question

Quizplus · Accepted Answer

Increasing operating leverage typically involves higher fixed costs, which can reduce the fixed assets turnover ratio as fixed assets are utilized more intensively.

Which of the Following Statements Is CORRECT? as a Firm