Operating leverage individually affect the sensitivity

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Reference no: EM131861531

How do financial leverage and operating leverage individually affect the sensitivity of a firm to be profitable?

A. FL and OL both are risky during economic downturns as they each present fixed cost obligations apart from revenues.

B. FL and OL are better when higher, always.

C. FL and OL are irrelevant when considering the business cycle, which is aligned with revenues.

Reference no: EM131861531

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