15 May 2013
Operating leverage measures the company`s level of fixed costs relative to its variable costs A company with high degree of operating leverage has a larger ratio of fixed costs to variable costs, and as a result has a higher breakeven point.
15 May 2013
The operating leverage of a business is the ratio of the change in revenue to the change in operating income. It is a way to measure the movement (up & down ) of the businesses earnings in relation to sales. A business with higher operating leverage is riskier than an equivalent business with lower operating leverage.
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