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Pablito Fechino
on Dec 01, 2024

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An increase in a firm's operating leverage will also increase its financial leverage.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, influenced by the proportion of fixed to variable costs in a company's cost structure.

Financial Leverage

The use of borrowed capital or debt to increase the potential return of an investment, amplifying both potential gains and losses.

  • Understand the relationship between operating leverage and financial leverage.
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Marisa MannetteDec 04, 2024
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