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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Operational gearing ratio followup
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?
1. The question is wrong not to say how the ratio is calculated.
2. Yes (if higher relative to variable costs).
