The three basic types of leverage are ________.
A) operating, production, and financial
B) operating, production, and total
C) production, financial, and total
D) operating, financial, and total

Question

Quizplus · Accepted Answer

The three basic types of leverage are operating, financial, and total. Operating leverage refers to the use of fixed costs in operations, such as rent or salaries, to maximize profits. Financial leverage involves using debt to finance operations, which can increase returns if the return on investment is greater than the cost of borrowing. Total leverage is the combination of operating and financial leverage and measures the overall risk and return of a business. Option A, B, and C are incorrect because they do not include all three types of leverage.

The Three Basic Types of Leverage Are ________