If a firm's sales decrease by 15%, and profits decrease by 20% during a recession, the firm's operating leverage is

A) 1.33.
B) 0.75.
C) 5.
D) −5.

Operating Leverage

Operating leverage describes the degree to which a company can increase its profits by increasing sales, reflecting the proportion of fixed costs to variable costs.

Sales Decrease

A reduction in the volume or value of sales within a company during a specific period compared to a previous period.

Profits Decrease

A reduction in the financial gains achieved by a business or investment over a specific period.