Final answer:
Operating leverage influences the top half of the income statement while financial leverage deals with the bottom half.
The statement is False.
Step-by-step explanation:
The statement is False.
Operating leverage and financial leverage are both concepts related to a company's financial structure and the impact on its income statement.
Operating leverage refers to the degree to which fixed costs are present in a company's cost structure. It influences the top half of the income statement, specifically the company's operating income or EBIT (earnings before interest and taxes).
Financial leverage refers to the use of debt to finance a company's operations. It deals with the bottom half of the income statement, specifically the company's net income, which includes the effects of interest expense.