If a firm faces high operating leverage, it can reduce the variability over time

Question

If a firm faces high operating leverage, it can reduce the variability over time in its ROA by:

Do more of its research and development work in-house.

Reduce reliance on hourly worker and shift more to salaried workers.

Buy more of its machinery outright instead of leasing.

Rely more on product discounts than advertising to increase sales.

Do more of its research and development work in-house.

Reduce reliance on hourly worker and shift more to salaried workers.

Buy more of its machinery outright instead of leasing.

Rely more on product discounts than advertising to increase sales.

Explanation / Answer

If a firm faces high operating leverage, it can reduce the variability over time in its ROA by buying more of its machinery outright instead of leasing.

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