Hōʻike wale
0:00
S… Speaker 1 (CMA_01)
small sales increase but big profit jump here's why operating leverage
0:04
S… Speaker 1 (CMA_01)
refers to how much a business depends upon its fixed cost like salaries
0:08
S… Speaker 1 (CMA_01)
rents equipments so higher fixed cost is equal to higher operating
0:12
S… Speaker 2 (CMA_01)
leverage let us assume you run a gym
0:15
S… Speaker 1 (CMA_01)
you pay heavy rent and equipment cost but each new customer
0:19
S… Speaker 1 (CMA_01)
almost cost nothing so when more people join in your cost it
0:23
S… Speaker 1 (CMA_01)
does not increase but your income does and your profit shoots up rapidly but
0:28
S… Speaker 1 (CMA_01)
if customers decrease you will still have to pay those fixed expenses and that
0:32
S… Speaker 1 (CMA_01)
result in adverse impact on your income your profits clearly
0:36
S… Speaker 1 (CMA_01)
shows down so high operating leverage is equal to high profit potential
0:40
S… Speaker 1 (CMA_01)
but also high risk stay tuned for more such videos

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