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Emily Matos
on Nov 07, 2024

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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.
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Hezam AnaloNov 08, 2024
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