Asked by
Mishal Fatima
on Dec 09, 2024Verified
The fixed costs of a project are $6,000. The depreciation expense is $4,500 and the operating cash flow is $18,000. What is the degree of operating leverage for this project?
A) 1.33
B) 1.44
C) 1.50
D) 2.25
E) 3.00
Operating Leverage
A measure of how revenue growth translates into growth in operating income, indicating the fixed versus variable costs structure of a company.
Depreciation Expense
Strategically spreading out the cost of a concrete asset over the course of its serviceable life.
Operating Cash Flow
A measure of the cash generated by a company's normal business operations, indicating whether a company is able to generate sufficient positive cash flow to maintain and grow its operations.
- Measure the operating leverage factor for a designated project.
Verified Answer
GD
Learning Objectives
- Measure the operating leverage factor for a designated project.