Firms with relatively high nonfinancial fixed costs are said to have a high degree of what?

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Firms with relatively high nonfinancial fixed costs are said to have a high degree of what?

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Firms with relatively high nonfinancial fixed costs are said to have a high degree of what?

Explanation & AnswerSolution by a verified expert

Explanation

Operating leverage is when fixed costs are used in a firm's operations. Operating leverage measures the percentage of fixed cost in total cost. If the percentage of fixed cost is high then there is high degree of operating leverage and if the percentage of fixed cost is low then there is low degree of operating leverage.

Verified Answer

Firms with a high percentage of fixed cost are said to have high degree of operating leverage.

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