Question

What is meant by the term "operating leverage"? Is high operating leverage a positive or negative position?

Answer 1

OPERATING LEVERAGE:-

The operating leverage can be characterized as the commitment or margin taken out from the sale of the product that takes care of the settled expense and variable expense acquired to manufacture or produce the product .

On the off chance that an product was contributes less to the settled expense and high to the gain fullness then the item is profoundly utilized where as though the item is contributing high to the settled expense and less to the productivity of the company then the item is less leveraged.

Thus the company with higher leverage it was generates a higher profits.

so the high operating leverage was definatly gives good position