A firm that has zero fixed costs will have a degree of cash flow operating leverage equal to one.

Name: A firm that has zero fixed costs will have a degree of cash flow operating leverage equal to one.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The degree of cash flow operating leverage measures the sensitivity of operating cash flow to changes in sales. With zero fixed costs, cash flow changes proportionally with sales, resulting in a leverage of one.

A Firm That Has Zero Fixed Costs Will Have a Degree