Problem

Comparison of operating leverage and financial leverage The concept of financial leverage...

Comparison of operating leverage and financial leverage The concept of financial leverage was introduced in Chapter 7 and expanded on in Chapter 11. In Exercise 7.15 you were asked to describe the risks associated with financial leverage. You should now review the solution provided for this problem at www.mhhe.com/ marshall9e.

Required:

a.Describe the risks associated with operating leverage.


b. Outline the similarities and differences between operating leverage and financial leverage. (Hint: Compare Exhibit 12-9 to the discussion and analysis in Exhibits 7-2 and 11-3.)

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