Companies with a high degree of operating leverage (DOL) tend to have a higher percentage of fixed costs, which remain largely constant regardless of production volume, whereas companies with a low degree of operating leverage tend to have cost structures with a higher proportion of variable costs that are closely related to production volume.
A cost-accounting method called operating leverage assesses how much a company or project can raise operating income by raising revenue. Businesses with high operating leverage generate revenues with low variable costs and large gross margins. Operating leverage is used to calculate a company's break-even point, which also helps identify the appropriate selling prices to pay all costs and turn a profit. Businesses with substantial operational leverage must pay a higher monthly amount of fixed costs regardless of whether they sell any units of product. The potential risk from forecasting risk, where a relatively modest inaccuracy in sales forecasting can be compounded into huge errors in cash flow predictions, increases with the level of operating leverage.
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Answer:
D.
Explanation:
A brokers' call can be defined as the interest rate that banks charge on loans given to brokerage firms. It is also known as call loan rates. The brokers use this loan to fund their traders' margin account.
The statements correct about brokers' calls from the given options is D. The broker's calls are funds used by both individuals and broker from the bank. Individuals use this loan to buy stocks whereas brokers borrow with an agreement to repay immediately.
Therefore, option D is correct.
Answer:
$54,000
Explanation:
The computation of the residual income is shown below:
= Operating income - minimum return
where,
operating income = $234,000
And, the minimum return equal to
= Invested asset amount × minimum rate of return
= $1,800,000 × 10%
= $180,000
Now put these values to the above formula
So, the value would equal to
= $234,000 - $180,000
= $54,000
Sand.
Paper was originally tree, steel was metal, glass was heated to become glass
Answer:
e. $3,892,587.08
Explanation:
The value of Nabor Industries entire company using the free cash flows can be determined by calculating the present value of all free cash flows that will be occurred in the future in the following manner:
Present value of 2004 free cash flow $176,991.15
200,000(1+13%)^-1
Present value of 2005 free cash flow $234,944
300,000(1+13%)^-2
Present value of 2006 free cash flow $277,220.06
400,000(1+13%)^-3
Present value of cash flows after 2006 $3,203,431.86
((400,000(1+4%))/(13%-4%))*(1+13%)^-3
Value of Nabor Corporation $3,892,587.07
So based on the above calculations, our answer is e. $3,892,587.08