What does a very high degree of operating leverage indicate?

Name: What does a very high degree of operating leverage indicate?
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A high degree of operating leverage indicates that a significant portion of the company's costs are fixed costs. This means that a small change in sales volume can result in a large change in operating income. This creates greater risk for the company, as any reduction in sales will result in a disproportionately greater reduction in profits.

What Does a Very High Degree of Operating Leverage Indicate