初期

问题如下：

Given the forecast of deteriorating business conditions, which company will experience a greater change in cash flow and profitability?

选项：

Newtech

No difference

Oldtech

解释：

C is correct.

With revenue growth slowing, Oldtech is likely to experience a greater change in cash flow and profitability. Despite being in the mature phase of the corporate life cycle, during which one would expect stable profits, Oldtech has high operating leverage given its high degree of fixed cost. This will result in a greater change in profits for a given change in revenues. In contrast, Newtech’s costs are variable, with low operating leverage.