Operating leverage: an underutilized risk management tool
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Citation (published version)Gregory Sabin. 2019. "Operating Leverage: An underutilized risk management tool." Journal of Cost Management, Volume 33, Issue 6, pp. 37 - 44 (7).
Operating leverage refers to the relation of a firm’s fixed to variable costs. This relation can be used to support specific business strategies, enhance growth opportunities as well as manage systematic risk. All of these aspects can impact firm value and performance. This article is intended to stimulate some additional thought on the implications of operating leverage and nudge CFO’s into more actively managing their cost structure.
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