Jump to Solution
How does operating leverage affect business risk?
♥ 0 |
How does operating leverage affect business risk? |
Explanation & Answer

Here is a tip:
Operating leverage is the extent to which operating costs are fixed.
Explanation
Business risk is a risk inherent in the firm's operations without considering the effects of debt. The level of business risk is related to the volatilities of operating earnings and if the firm maintains a higher fixed cost, the operating earnings will become more sensitive.
Verified Answer
Higher operating leverage leads to a higher business risk, assuming everything else is constant.
Purchase this answer to view it. $5
Login/Sign up for free, load your wallet instantly using PayPal or cards and purchase this solution to view it.
Looking for the solution to this or another homework question?
If you need essay writing assistance or homework solutions, log in or sign up for a free account and ask our writers any homework question.