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What Does Operating Leverage Mean?; 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 providing a very high gross margin, is said to be highly leveraged.
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Operating leverage - Wikipedia, the free encyclopedia
The operating leverage is a measure of how revenue growth translates into growth in operating income. It is a measure of leverage, and of how risky (volatile) a company's operating income is. There ...
en.wikipedia.org/wiki/Operating_leverage |
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In his 1970 textbook, Cherry said that, "Operating leverage, then, refers to the magnified effect on operating earnings (EBIT) of any given change in sales...And the more important, proportionally, are fixed costs in the total cost structure, the more marked is the effect on EBIT." [Cherry, 254]
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$122,500 contribution margin ... The degree of operating leverage at a given level ... fluctuations in sales on operating income...
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Operating leverage: A magnification of profits (EBIT, or net operating income) that results from having fixed operating costs in the company. Operating leverage increases as the ratio of fixed costs to variable costs increases.
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Definition of operating leverage from Webster's New World Finance and Investment Dictionary. ... Dictionary Home » Webster's New World Finance and Investment Dictionary » operating leverage...
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