________ is the potential use of fixed operating costs to magnify the effects of changes in sales on earnings before interest and taxes.
A) Financial leverage
B) Operating leverage
C) Operating budget
D) Ratio analysis

Question

Quizplus · Accepted Answer

Operating leverage is the potential use of fixed operating costs to magnify the effects of changes in sales on earnings before interest and taxes. It measures the degree to which a company uses fixed costs in its operations, which can result in higher profit margins when sales are strong, but can also lead to larger losses when sales are weak.

________ Is the Potential Use of Fixed Operating Costs to Magnify