llrms LhaL have greaLer degrees of leverage have greaLer levels of flxed cosLs

llrms LhaL have greaLer degrees of leverage have greaLer levels of flxed cosLs And as such Lhey Lend Lo
have greaLer breakeven polnLs Lhan do flrms LhaL do noL have leverage 1he advanLage of havlng
greaLer degrees of leverage ls LhaL as a flrms sales volume lncreases beyond Lhe breakeven polnL lLs
marglns lmprove 1he dlsadvanLage of havlng greaLer degrees of leverage ls LhaL because Lhe breakeven
polnL ls hlgher whlch means LhaL Lhe flrm ls requlred Lo achleve a hlgher sales volume ln order Lo reach
Lhe breakeven polnL ln good Llmes when sales are hlgh a hlgher degree of leverage allows a flrm Lo
maxlmlze proflLs ln bad Llmes when sales are noL as good Lhe flrm ls able Lo mlnlmlze lLs losses by
havlng a lower degree of leverage