Which of the following companies would you expect to have the highest operating leverage number and which would have the lowest?
Highest operating leverage number
Answer Two of the following four questions.
1. Which of the following companies would you expect to have the highest operating leverage number and which would have the lowest? Be sure to explain your choices.
2. Select one of the above companies and tell me what kind of cost structure you think it has (how much of their total costs are fixed and how much are variable)? What impact does that cost structure have on the way this company may try to weather the current economic conditions?
3. Identify a company with which you’re familiar and discuss their cost structure and how that cost structure has affected their profitability during the past year.
4. Define operating leverage, discuss the appropriate level of operating leverage for a start-up company, a company in a growing market, and a company with a product in a mature market.