Question: Which of the following will increase BOTH the operating leverage and the financial leverage? Assume operating cash flow OCF=(P-c)Q-FC, where P is the price, c
Which of the following will increase BOTH the operating leverage and the financial leverage? Assume operating cash flow OCF=(P-c)Q-FC, where P is the price, c is the variable cost, Q is the quantity of goods sold, and FC is the fixed costs.
| A. | Holding P,c, and FC constant, increase Q | |
| B. | Holding P,c, and Q constant, increase FC | |
| C. | Holding sales (i.e.,PQ), c, and FC constant, increase P | |
| D. | None of the above |
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