Financial Knowledge: Operating Leverage
(1) the meaning of operating leverage
Operating leverage refers to the existence of fixed costs. cause Changes in profit before tax are greater than changes in production and sales volume. lever Effect.
(two) measurement of operating leverage
The most commonly used indicator of operating leverage is business.
lever
Coefficient or operating leverage.
The operating leverage coefficient refers to the rate of change in profit before tax, which is equal to the multiple of volume change rate in production and marketing business.
The formula is:
Operating leverage ratio = pre tax profit change rate / production and sales volume change rate
The simplified formula of operating leverage coefficient is:
Reporting period operating leverage ratio = base period marginal contribution / base interest pre tax profit
(three) relationship between operating leverage and operational risk
Operating leverage coefficient, fixed cost and operating risk change in the same direction. That is, under other factors, the higher the fixed cost and the greater the leverage coefficient, the greater the risk of enterprise operation.
The relationship can be expressed as:
Operating leverage coefficient = base period marginal contribution / (marginal contribution base fixed cost)
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