What is Operating Leverage? Definition, Formula and Business Impact

Operating leverage is a key financial metric that measures how changes in sales affect a company’s profitability. According to recent financial analyses, companies with high operating leverage can experience up to 3x greater profit fluctuations compared to their sales changes. This metric helps businesses make critical decisions about pricing strategies and resource allocation. Financial experts at j2t.com emphasize the importance of understanding what is operating leverage for optimizing cost s...