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Uncertainty, the Theory of Production, and Optimal Operating Leverage

Enregistré dans:
Publié dans:Southern Economic Journal (pre-1986) vol. 47, no. 3 (Jan 1981), p. 690-702
Auteur principal: Shrieves, Ronald E
Publié:
Southern Economic Association
Sujets:
Management decisions
Utility functions
Capital assets
Costs
Earnings
Operating leverage
Profits
Expected utility
Random variables
Decision making
Scholarships & fellowships
Flexibility
Expected values
Accès en ligne:Citation/Abstract
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Résumé:A firm's operating leverage decision involves choice among alternative production arrangements which differ in terms of "fixed" and "variable" cost components. Higher operating leverage is generally associated with higher levels of fixed costs and correspondingly higher levels of expected operating profit and higher variability or volatility in operating profit. While some attempts to define the association between operating leverage and firms' risk positions have been made, they are incomplete in the sense that they do not constitute a theory of (optimal) operating leverage, but treat it as a given technical parameter.
ISSN:0038-4038
2325-8012
Source:ABI/INFORM Global