CMA_01
Jun 02, 2026 08:48
· 0:44
· English
· Whisper Turbo
· 2 Sprekers
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Uitsluitend tonen
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small sales increase but big profit jump here's why operating leverage
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refers to how much a business depends upon its fixed cost like salaries
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rents equipments so higher fixed cost is equal to higher operating
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leverage let us assume you run a gym
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you pay heavy rent and equipment cost but each new customer
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almost cost nothing so when more people join in your cost it
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does not increase but your income does and your profit shoots up rapidly but
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if customers decrease you will still have to pay those fixed expenses and that
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result in adverse impact on your income your profits clearly
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shows down so high operating leverage is equal to high profit potential
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but also high risk stay tuned for more such videos
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