Degree of operating leverage, Financial Management

Degree of Operating Leverage

A measure of the firm's operating leverage, which is calculated as the contribution margin distributed by income before taxes. A rigid with a high degree of operating leverage will have a huge proportion of fixed costs in its total costs. This kind of rigid will experience a largest percentage increase in income from a given percentage increase in unit sales.

Posted Date: 10/16/2012 5:20:01 AM | Location : United States

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