Operating Leverage

Posted in Finance, Accounting and Economics Terms, Total Reads: 795
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Definition: Operating Leverage

Operating leverage is defined as the level to which a company or a firm incurs a fixed and variable costs combination.

The formula for the same is:

Operating Leverage = [Number of units x (Price/Unit - Variable Cost/ Unit)] / Number of units x (Price/Unit - Variable Cost/Unit) - Fixed Operating Cost

 

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