General Knowledge · Financial Management
What is implied when a company experiences a decrease in its operating gearing (operating leverage) ratio?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The company has profits which are less sensitive to changes in sales volume.✓
- 2The company's profits become more sensitive to sales volume changes.
- 3The company becomes structurally more risky.
- 4The company has a higher proportion of fixed costs.
Correct answer
The company has profits which are less sensitive to changes in sales volume.
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