Operating leverage is measured as the responsiveness of the firm's earnings before interest and taxes relative to fluctuations in sales.

Question

Quizplus · Accepted Answer

This statement is true. Operating leverage is a measure of how much a firm's operating income (earnings before interest and taxes) changes in response to changes in revenues or sales. It shows how sensitive a company's profitability is to changes in its revenue.

Operating Leverage Is Measured as the Responsiveness of the Firm's