The sensitivity of a firm's profit to changes in volume of sales is known as :
Operating leverage describes how operating profit responds to changes in sales volume because of fixed operating costs. Financial leverage concerns the effect of financing…
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The sensitivity of a firm's profit to changes in volume of sales is known as :
Answer and explanation
Correct answer A
Operating leverage describes how operating profit responds to changes in sales volume because of fixed operating costs. Financial leverage concerns the effect of financing costs, while the profit-volume ratio relates contribution to sales.
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Himachal Pradesh SET (HP SET)