Frequently asked questions
What does degree of operating leverage mean?
The degree of operating leverage measures the sensitivity of a company`s operating income to changes in its sales, indicating how efficiently fixed costs are being used.
What is meant by operating leverage?
Operating leverage refers to the extent to which a company uses fixed costs in its operations, affecting how changes in revenue impact operating income.
What is meant by operating leverage Quizlet?
According to Quizlet, operating leverage is the extent to which a firm can use fixed costs to generate higher profits as sales increase.