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Basic Question 3 of 5
Operating leverage ______
B. increases operating income variability relative to sales variability.
C. increases net income variability relative to operating income variability.
A. decreases operating income variability relative to sales variability.
B. increases operating income variability relative to sales variability.
C. increases net income variability relative to operating income variability.
User Contributed Comments 5
| User | Comment |
|---|---|
| in4maha | I dont get this question can any one explain it plz |
| hoyleng | in4maha : it asks about the formula for DOL |
| johntan1979 | DOL = % change in EBIT / % change in sales |
| stanevd | a is also possible |
| Inaganti6 | A is not possible I think the relation between EBIT and SALES gets very linear or there is a straight forward ratio/multiple type effect if there isn't any operating leverage |
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Learning Outcome Statements
evaluate a company's operating profitability and working capital using key measures
CFA® 2025 Level I Curriculum, Volume 3, Module 5.