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Operating Leverage: Definition, Calculation & Examples

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

What is the first step in determining a company's operating leverage?

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1. A company with a high operating leverage has:

2. What is the final step in calculating operating leverage?

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About This Quiz & Worksheet

Topics these assessments test your knowledge of include operating leverage and the steps required to calculate it.

Quiz & Worksheet Goals

In these assessments, you will find out what you know about the following:

  • The first step in determining a company's operating leverage
  • What a high operating leverage reveals about a company
  • The importance of knowing about operating leverage

Skills Practiced

  • Information recall - access the knowledge you've gained regarding the first step in determining a company's operating leverage and its influence on the total cost to produce a product or service.
  • Knowledge application use your knowledge to answer questions on the example given in the lesson
  • Interpreting information - verify that you can read information regarding the importance of knowing about operating leverage as it relates to profit levels and interpret it correctly

Additional Learning

Continue to learn about calculating operating leverage by reviewing the lesson called Operating Leverage: Definition, Calculation & Examples. Some areas discussed by this lesson include:

  • The meaning of operating leverage
  • Definition and examples of high and low operating leverage
  • How to calculate operating leverage
  • An example of operating leverage calculation
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