This addresses which company has more operating leverage.
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Which company would have higher operating leverage: a software company that makes large investments in research and development, or a manufacturing company that uses expensive materials and relies on highly skilled manual labor rather than automation? Why?
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The solution provides a detailed discussion determining which company would have higher operating leverage, a software company that makes large investments in research and development, or a manufacturing company that uses expensive materials and relies on highly skilled manual labor rather than automation.
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The manufacturing company that uses expensive materials and relies on highly skilled manual labor rather than automation would have a higher operating leverage than a software company. The manufacturing company is purchasing the expensive materials either on accounts payable or from cash and the highly skilled manual labor is paid ...
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