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What is the operating leverage effect and what causes it? What are the potential benefits and negative consequences of high operating leverage?
The operating leverage effect is the fact whereby a small change in sales activates a relatively large change in operating income. It is happened by the presence of fixed operating costs. The potential paybacks are that if sales are rising operating income will rise more quickly. The negative penalties are that falling sales will happen operating income to fall more quickly including negative values.
eco 372 final exam
Australian Securities and Investment Commission: The Australian Securities and Investment Commission (ASIC) is an independent government body established by the ASIC Act 1989.
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