How to Calculate Operating Leverage?


To calculate the operating leverage you need to know the price of the product or products, the cost per unit, and the fixed cost per unit. You can find more information at
Q&A Related to "How to Calculate Operating Leverage?"
1. Examine the formula to calculate operating leverage: Operating Leverage = (Price of Product - Variable Cost per unit] x units sold) / (Price of Product - Variable Cost per unit
1 Define the business' revenue and variable costs per unit sold, and its fixed costs. For our example, we'll use a factory that made and sold 1,000 widgets last year and had revenues
Answer Total Debt / Equity
A measurement of the degree to which a firm or
1 Additional Answer Answer for: how to calculate operating leverage
How to Calculate Operating Leverage
In finance, "leverage" is a common term that describes the extent to which a firm utilizes some resource to increase potential return on investment. Operating leverage analyzes how fixed operating costs, such as equipment, buildings and other fixed-asset... More »
Difficulty: Moderately Easy
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