Question

case of leveraged entity operating risk can generally be measured by​

Answer 1

Calculating the Degree of Operating Leverage

The degree of operating leverage can also be calculated by subtracting the variable costs of sales and dividing that number by sales minus variable costs and fixed costs.

Answer 2

Answer:

please

mark me as

BRINEST.

Explanation:

Leverage is the use of fixed costs in a company's cost structure. Business risk is the risk associated with operating earnings and reflects both sales risk (uncertainty with respect to the price and quantity of sales) and operating risk (the risk related to the use of fixed costs in operations).

KEY TAKEAWAYS

Companies take on debt, known as leverage, in order to fund operations and growth as part of their capital structure.

Debt is often favorable to issuing equity capital, but too much debt can increase the risk of default or even bankruptcy.

Operating leverage and financial leverage are two key metrics that investors should analyze to understand the relative amount of debt a firm has and if they can service it.