Operating leverage and financial leverage

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Using both operating leverage and financial leverage allows organizations to magnify their returns. Leverage not only magnifies returns as volume increases but can also magnify losses as volume decreases. A general rule in business is that organizations that are exposed to high leverage will likely act aggressively to cover their large fixed costs. Do you agree with this rule? Can you give an example of an organization that has demonstrated this in the recent past?

Reference no: EM13868516

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