CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

Operating leverage is a measure of the sensitivity of ______.
A. net earnings to changes in operating earnings
B. fixed operating costs to changes in variable costs
C. earnings before interest and taxes to changes in the number of units produced and sold

User Contributed Comments 5

User Comment
smiley25 Option C???
CoffeeGirl DFL:% in NI / % in operating income = EBIP / (EBIT - I)
DOL : % change in EBIT / % change in sales
SO C is correct.
A is wrong, because it's not the change in net sales, but change in EBIT.
achu This is a definition plain and simple. Learn it or lose it...
steved333 Damn, achu, that's pretty cold...
achu Was in a bad mood from getting this wrong. That last line was self-directed, not at smlley25
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