Operating leverage refers to the relative amount of fixed and variable costs that make up total costs for a company.

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Operating leverage is the degree to which fixed costs are present in a company's cost structure compared to variable costs. It measures the impact of changes in revenue on a company's operating income or earnings before interest and taxes (EBIT), as fixed costs do not change with changes in revenue while variable costs do.

Operating Leverage Refers to the Relative Amount of Fixed and Variable