An analyst projects that company XYZ’s sales will increase from $2.2 million to $2.4 million. COGS will increase from $1.4 million to $1.5 million, but fixed costs and depreciation expense should remain steady at $300 thousand and $200 thousand, respectively. Interest paid will increase from $100 thousand to $150 thousand. The firm’s tax rate will hold steady at 21%. 

All else being equal, what is the firm’s degree of operating leverage?

Answer rating: 100% (QA)

The degree of operating leverage DOL measures the sensitivity of a companys operating income to chan... View the full answer