Operating leverage is a cost-accounting formula that measures the degree to which a firm can increase operating income by increasing revenue.

Stride, Inc. LRN continues to deliver robust margin growth. In third-quarter fiscal 2025, the company reported a robust ...

Operating leverage measures a company’s fixed costs as a percentage of its total costs. It is used to evaluate a business’ breakeven point—which is where sales are high enough to pay for all ...

The formula to calculate the Degree of Operating Leverage is: DOL = Percentage change in EBIT / Percentage change in Sales Here EBIT stands for Earnings Before Interest and Taxes .

Operating leverage compares sales to the costs of production. Fixed costs involve the property, plant and equipment you use to create products. These costs are independent of the number of units ...

Microsoft's Degree of Operating Leverage is 105%, as calculated by 208,900% divided into 198,700%, per the formula above. In other words, Microsoft and AMD show different levels of ability to ...

One particular area of operating leverage for Airbnb is its workforce. As management pointed out, its revenue jumped 75% from 2019 to 2022 but it now employs 5% fewer people than it did back then.

We also project Midea’s operating margin to tick up to 10.8% in 2028 from 10.0% in 2023, thanks to a higher mix of premium products and better operating leverage.

Operating leverage, on the other hand, doesn’t take into account borrowed money. Rather, it’s a company’s ratio of fixed costs to variable costs.