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Calculate the degree of operating leverage

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Question - The following table summarizes the percentage changes in operating income, percentage changes in revenue and betas for four pharmaceutical firms. Firm % Change in Revenue % Change in Operating Income Beta PharmaCorp 27% 25% 1.00 SynerCorp 25% 32% 1.15 BioMed 23% 36% 1.30 Safemed 21% 40% 1.40 a. Calculate the degree of operating leverage for each of these firms. b. Use the operating leverage to explain why these firms have different betas.

Reference no: EM132597019

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