What is operating leverage

Assignment Help Financial Management
Reference no: EM131044648

What is operating leverage? How if at all, is it similar to financial leverage? If a firm has high operating leverage, would you expect it ot have high or low financial leverage? explain your reasoning?

Reference no: EM131044648

Questions Cloud

Accounts payable : A chain of appliance stores, APP Corporation, purchases inventory with a net price of $250,000 each day. The company purchases the inventory under the credit terms of 1/15, net 40. APP always takes the discount, but takes the full 15 days to pay its ..
About the cost of trade credit : A large retailer obtains merchandise under the credit terms of 1/10, net 35, but routinely takes 70 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's e..
The appropriate weighted average tax rate : Suppose that TipsNToes, Inc.'s capital structure features 75 percent equity, 25 percent debt, and its cost of equity is 12 percent, while its before-tax cost of debt is 8 percent. If the appropriate weighted average tax rate is 40 percent, what will ..
Portfolio with an expected return-investment requirement : In order to fund her retirement, Michele requires a portfolio with an expected return of 0.11 per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock..
What is operating leverage : What is operating leverage? How if at all, is it similar to financial leverage? If a firm has high operating leverage, would you expect it ot have high or low financial leverage? explain your reasoning?
Dividend is expected to grow at a steady : Brigapenski Co. has just paid a cash dividend of $2 per share. Investors require a 16% return from investments such as this. If the dividend is expected to grow at a steady 8% per year, what is the current value of the stock? a. $27 b. $36.73 c. $25 ..
Sensitivity analysis and break-even point : Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $836,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. What is the sensitivity of OC..
Example of asymmetric information in financial markets : An example of asymmetric information in financial markets is that
Capital market instrument : Which of the following is a capital market instrument?

Reviews

Write a Review

Financial Management Questions & Answers

  Dividend is expected to grow at a constant rate

Crazee Enterprises Corporation just paid a dividend and it expects that dividend to grow by 10 percent for the next three years. After that, the dividend is expected to grow at a constant rate of 5 percent in perpetuity. If the company's stock is cur..

  What is the apr on this loan-what is the ear on this loan

You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 35-year mortgage loan for 85 percent of the $3,350,000 purchase price. The monthly payment on this loan will be $16,800. What is the APR on this loan?  What is th..

  Assuming no other deposits are made to this account

You need to have $75,000 to purchase your dream car. You currently have $20,000. You can invest the money in an account that pays 5.5% interest each year. How long will it take you to have the money to purchase the car (assuming no other deposits are..

  Identify the types of economic considerations

Identify the types of economic considerations that would influence profitability in making the choice between the present production approaches versus making the decision to shift to a "level loading" set of processes. (15%)

  The straight method is used to depreciation fixed assets

As a recently appointed auditor for Gibbs Manufacturing Co., the Manager of the audit, asked you to examine selected accounts before issue the financial statement of 12/31/10, to be audited. The straight method is used to depreciation fixed assets. T..

  About weighted average cost of capital

What weights should we use when calculating the WACC, market value weights or accounting book values. To do this find the market value of equity (no. of shares times the share price) and the market value of financial debt (if no traded debt you may n..

  What is the expected return of your portfolio

Stock J has a beta of 1.20 and an expected return of 13.16 percent, while Stock K has a beta of .75 and an expected return of 10.10 percent. You want a portfolio with the same risk as the market. What is the expected return of your portfolio?

  Injecting huge liquidity and there is no fear of inflation

We have the Fitzpatrick bond which has a convexity of 30, duration of 4, a ytm of 12% and a maturity of 25 years. The central bank is injecting huge liquidity, and there is no fear of inflation. If the yields alter by 100 basis points, what would the..

  Find payoff of interest rate call option on annual rate

Find the payoff of an interest rate call option on the annual rate with an exercise rate of 10 percent if the one-period rate at expiration is 11 percent.

  What quantity would generate a profit

The company's fixed operating cost are $500,000. its variable costs are $3.00 per unit, and the product's sales price is $4.00. What is the company's breakeven point? What Quantity would generate a Profit of $1,000,000?

  Calculate the present value-investments pay

Calculate the present value of $7,000 received four years from today if your investments pay

  Maintenance margin requirement for purchases of stock

The maintenance margin requirement for purchases of stock and bond market assets is set by:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd