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Q » Define operating leverage.
06 Dec, 2025
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A » Operating leverage refers to the degree to which a company can increase operating income by increasing revenue, achieved by having fixed costs. High operating leverage means that a small change in sales can lead to a large change in operating income, since fixed costs remain constant while revenues vary. Businesses with significant fixed costs typically benefit from higher operating leverage, amplifying profits during good times but increasing risk during downturns.
06 Dec, 2025
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