Firms with a high degree of operating leverage are Group of answer choices

easily capable of surviving large changes in sales volume.
usually trading off lower levels of risk for higher profits.
significantly affected by changes in interest rates.
trading off higher fixed costs for lower per-unit variable costs.

The correct answer is letter "D": trading off higher fixed costs for lower per-unit variable costs.

Explanation:

Operating Leverage is the relation between the fixed and variable costs of a company. The Degree of Operating Leverage (DOL) tests how well a business uses its fixed costs to generate profits. It is calculated by:

The DOL helps in determining the degree of revenue and losses a company could have. Typically, firms with high DOLs substitute their more expensive fixed costs for variable costs per unit that are lower.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30