If a profitable company has both fixed and variable costs,its operating leverage will always be greater than 1.

Question

Quizplus · Accepted Answer

Operating leverage measures the proportion of fixed costs in a company's cost structure. A company with both fixed and variable costs will have an operating leverage greater than 1 because fixed costs cause profits to increase at a faster rate than revenues, amplifying the effects of changes in sales volume on profits.

If a Profitable Company Has Both Fixed and Variable Costs,its