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Explain why a company with high operating leverage faces

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Question:

Companies often use leverage to augment profits. Based on what you learned this week, please explain the following in detail:

With regards to Operating Leverage, please explain why a company with HIGH Operating Leverage faces greater financial risk in a declining sales period compared to a company with LOW Operating Leverage. (HINT: The key here is the relation between fixed costs and variable costs.)

What does a business''s Contribution Margin represent? What does the Contribution Margin have to do with Operating Leverage?

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This work is done in Microsoft word document is about the operating leverage and how it has a subsequent addressable in the business risk.This document was prepared in the MS word is all about how to answer the operating leverage risk.

Reference no: EM132444673

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