operating leverage

There are several ways to define operating leverage, the most common.

Stage 1 stocks are the companies with the greatest operating leverage.

"They have very good revenue momentum and a lot of positive operating leverage."

It has the most operating leverage in the industry.

Timing and operating leverage could now work to Pennzoil's advantage.

It is a useful quantity in carrying out various calculations, and can be used as a measure of operating leverage.

This leads to two measures of operating leverage:

It relates to operating leverage, which measures the ratio between fixed costs and variable costs.

Operating leverage is a measure of how revenue growth translates into growth in operating income.

"I am not worried about valuations at this point," he said, "because we have not begun to see the operating leverage at these companies."

"Generally, companies that are growing earnings at a fast clip are getting some sort of operating leverage from revenue growth" by improved efficiency, he said.

"We will have operating leverage from one brand, one service, one back end and one management team.

"This is the reason why hotels have tremendous operating leverage not seen in office or industrial properties," Mr. Woods said.

"But there's a lot of operating leverage in this business, a lot of fixed costs in those kilns."

"We look for top-line revenue and sales growth and, ideally, expanding profit margins through operating leverage," she said.

Contribution margin analysis is a measure of operating leverage: it measures how growth in sales translates to growth in profits.

A. If I wanted to own one I would go for a company with low operating leverage and low financial leverage.

The analyst went from "neutral" to "buy" on Inland Steel, which he regards as a low-cost producer with considerable operating leverage.

The company's fiber-optic network has provided U S Sprint with significant operating leverage and a slight competitive edge.

"We're not interested in financial leverage, we're interested in operating leverage," said Walsh.

A. Normally, you think of parts companies as having less operating leverage and lower fixed costs, in part because they employ either nonunion or flexible union labor.

She, too, cites Inland's operating leverage and estimates company earnings at $3.28 a share for 1987 and at $4.99 next year.

Operating leverage can also be measured in terms of change in operating income for a given change in sales (revenue).

Operating Leverage (When There is a Change in both Quantity and Price)

Operating leverage is an attempt to estimate the percentage change in operating income for a one-percent change in revenue.