Question

Using the Internet research and provide examples of two companies, one which has high operating leverage and another that has low operating leverage. What are the companies? What are the implications of the different amounts of operating leverage? Why might each company have chosen its particular leverage strategy. Relate the leverage strategy to its industry, life-cycle, and other factors that help determine the amount of leverage a company would choose.

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The companies that have high operating leverage have high levels of fixed costs in their cost structure. An example is the telecom company AT&T. The company incurs substantial expenditure to set up towers and telecom networks and as such, it has substantial fixed costs which accrue due to these...

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