1)Sir there was an MCQ in kit that which of the following would be implied by a decrease in company operating gearing ratio. And the answer was company has profits which are less sensitive to changes in sales volume. Can you please explain me this? And here it was not mentioned that from which formula they were calculating operational gearing ratio
2)If fixed cost is higher then operating gearing (not the operating gearing ratio) will also be higher na?
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Operational gearing ratio followup
8y ago#11. The question is wrong not to say how the ratio is calculated.
2. Yes (if higher relative to variable costs).
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