--%>

Introduction of the term Operating Leverage

Give a brief introduction of the term Operating Leverage?

E

Expert

Verified

It is a leverage that refers to the improvement of profits since there is a fixed operating cost that is involved with each component. When the sales raises fixed cost does not raise and it results in higher profits. Higher fixed expenditures results in higher operating leverages that leads to higher business risks.

   Related Questions in Business Economics

  • Q : Characteristics of Perfectly

    Perfect competition is characterized by all of the following except w) heavy advertising by individual sellers. x) homogeneous products. y) sellers are price takers. z) a horizontal demand curve for individual sellers.

    Q : Define Direct and inverse relationships

    Define Direct and inverse relationships?

  • Q : Characterized contestable markets

    Industries that are described as "contestable": (w) will experience long-run economic profits equal to zero. (x) are difficult for firms to enter, but not to exit. (y) are difficult for firms to exit, but not to enter. (z) will charge prices greater t

  • Q : Describe the Personal distribution of

    Describe the Personal distribution of income?

  • Q : Fiscal Policy Fiscal Policy : Public or

    Fiscal Policy:Public or government finance is a field of economics. This deals with budgeting the revenues and expenditures of government (i.e., or public sector). It is regarding the identi

  • Q : Explain how Entrepreneurs are

    Explain how Entrepreneurs are risk-takers?

  • Q : Distinguish clearly between a plant

    Distinguish clearly between a plant, a firm, and an industry?

  • Q : Significant that economics is not a

    Why is it significant that economics is not a laboratory science?  What problems may be evolved in deriving and applying economic principles?

  • Q : Need of the Economic Efficiency

    Economic efficiency for society needs which the: (i) opportunity costs of all goods be at their lowest possible values. (ii) maximum probable benefits are acquired for given costs. (iii) greatest possible net benefits are squeezed through available re

  • Q : Change in supply and a change in the

    Distinguish between a change in supply and a change in the quantity supplied?