Question: Explain why relatively small changes in companies revenues can result in relatively large changes in their earnings or losses. In other words, if a companys

Explain why relatively small changes in companies revenues can result in relatively large changes in their earnings or losses. In other words, if a companys sales increase 12%, why do its earnings not also increase 12%?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Joey Co. holds a 90% ownership interest in Legoria Co and uses the equity method to account for its investment in Legoria Co. Each year, Legoria Co. purchases large quantities of a certain metal used...

Articles: (https://www.accountingtools.com/articles/operating-leverage) (https://www.rovio.com/(Angry birds))...

Prior to beginning work on this discussion, please read the Investing Newsletter of Forbes Operating Leverage. The Finnish company Rovio Entertainment Corporation. which produces and sells the game...

The Finnish company Rovio Entertainment Corporation that produces and sells the game Angry Birds, following years of falling earnings, job cuts and divestments announced that its revenue increased...

Prior to beginning work on this discussion, please read the Investing Newsletter of Forbes Operating Leverage. The Finnish company Rovio Entertainment Corporation. that produces and sells the game...

Prior to beginning work on this discussion, please read the Investing Newsletter of Forbes Operating Leverage(Links to an external site.) . The Finnish company Rovio Entertainment Corporation(Links...

how does cost-volume-profit (CVP) analysis and flexible budgeting can enable students to understand the different stages involved in starting up a business, projecting out results, and monitoring...

Explain why relatively small changes in companies' revenues can result in relatively large changes in their earnings or losses. In other words, if a company's sales increase 12%, why do its earnings...

PLEASE COMPLETE NO LATER THAN 10/07 @8:00AM Each question(1,2,& 3) must be a minimum of 200 words. Please make answers detailed and knowledgeable based off the attached reading. ARE YOU ABLE TO...

Define the key aspects of Western Civilization and discuss the different ways historians might understand the term. How west is the West, for example? What are the most important changes, in your...

What is the main technique used for verifying scope? Give an example of scope verification on a project.

Income Years Escalations 0 1 2 3 4 5 6 7 8 PGI 3.00% $81,750.00 $84,202.50 $86,728.58 $89,330.43 $92,010.35 $94,770.66 $97,613.78 $100,542.19 Less-Vacancy $3,270.00 $3,368.10 $3,469.14 $3,573.22...

Hypothesis Testing of a Single Mean LCTCS Tuition: Louisiana Community And Technical College System consist of 2 community colleges across the state. I think RPCC's tuition and fees is lower than the...

4. Read the advice column in your daily paper or an online magazine. Bearing in mind what youve read in this chapter, consider the nature of the interpersonal conflicts discussed. What are the...

2. The engagement in and resolution of interpersonal conflict are often key factors in romantic comedies (like Life as We Know It and When Harry Met Sally), as well as in buddy-driven action films...

3. Define the roles individuals play in a group