Asked by
Emily Matos
on Nov 07, 2024Verified
The fixed costs of a project are $8,000. The depreciation expense is $3,500 and the operating cash flow is $20,000. What is the degree of operating leverage for this project?
A) .40
B) .71
C) .87
D) 1.40
E) 2.50
Operating Cash Flow
The cash generated by a company's normal business operations, indicating whether a company is able to generate enough positive cash flow to maintain and grow its operations.
Depreciation Expense
The allocation of the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up over time.
- Understand the concept of operating leverage and compute its degree for various projects.
Verified Answer
HA
Learning Objectives
- Understand the concept of operating leverage and compute its degree for various projects.