Tribley Inc. has an operating leverage of 8.0. If the company's sales increase by 19%, its net operating income should increase by about:
A)152.0%
B)19.0%
C)8.0%
D)42.1%

Question

Quizplus · Accepted Answer

Operating leverage measures how sensitive net operating income is to a given percentage change in sales. With an operating leverage of 8.0, a 19% increase in sales would result in an increase in net operating income of 19% * 8 = 152%.