A company with a low degree of operating leverage is at greater risk during downturns in the economy.

Question

Quizplus · Accepted Answer

A company with a low degree of operating leverage has lower fixed costs and higher variable costs, which means they are less affected by downturns in the economy compared to companies with high fixed costs and low variable costs (i.e. high degree of operating leverage). Therefore, they are at lower risk during downturns in the economy.

A Company with a Low Degree of Operating Leverage Is