The percentage of fixed costs in a company's cost structure. Generally, the higher the operating leverage, the more a company's income is affected by fluctuation in sales volume. The higher income vs. sales ratio results from a smaller portion of variable costs, which means the company does not have to pay as much additional money for each unit produced or sold. The more significant the volume of sales, the more beneficial the investment in fixed costs becomes.
Related information about operating leverage:
- Operating leverage - Wikipedia, the free encyclopedia
Operating leverage is a measure of how revenue growth translates into growth in operating income.leverage, and of how risky (volatile) a company's operating ...
- Operating Leverage Definition | Investopedia
A measurement of the degree to which a firm or project incurs a combination of fixed and variable costs. 1. A business that makes few sales, with each sale ...
- Degree Of Operating Leverage (DOL) Definition | Investopedia
A type of leverage ratio summarizing the effect a particular amount of operating leverage has on a company's earnings before interest and taxes (EBIT).
- The Concept of Operating Leverage
Like financial leverage, operating leverage magnifies results, making gains look better and losses look worse. Both operating and financial leverage increase ...
- Operating Leverage Definition, Formula & Calculation ...
We explain the definition of Operating Leverage, provide a clear example of how it works and explain why it's an important concept in business, finance ...
- What is operating leverage? definition and meaning
Definition of operating leverage: The percentage of fixed costs in a company's cost structure. Generally, the higher the operating leverage, the more a company's ...
- Operating Leverage - Financial Dictionary - The Free Dictionary
Fixed operating costs, which are characterized as leverage because they accentuate variations in profits. Operating Leverage. The level to which a company is ...
- Operating Leverage
Operating leverage: A magnification of profits (EBIT, or net operating income) that results from having fixed operating costs in the company. Operating leverage ...