An increase in a firm's operating leverage will also increase its financial leverage.

Name: An increase in a firm's operating leverage will also increase its financial leverage.
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Question

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Operating leverage is related to the proportion of fixed costs in a company's cost structure, while financial leverage is related to the use of debt in the company's capital structure. An increase in operating leverage does not directly affect financial leverage.

An Increase in a Firm's Operating Leverage Will Also Increase