Operating Leverage Formula | Example | Calculation | Analysis

Financen31409 Jul, 2021Other

In order to measure a company?s fixed costs as a ratio of its total costs, we use operating leverage. So, it is a cost-accounting formula that tells us the proportion in which a firm can increase its operating income by increasing its revenue. Thus, a business with sales of high margin with low variable cost has a high level of operating leverage. So, the operating leverage meaning is clear which measures the operating income by increasing revenue.