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Operating leverage =

This question belongs to Commerce Financial Management
Financial Management
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Operating leverage = ______.

Answer & Solution
Correct Answer: Option A
Operating leverage = contribution / EBIT. A firm's operating leverage is defined as the percentage change in the firm's operating earnings (EBIT less any non-operating income), that accompanies a percentage change in the contribution margin. That is, the operating income elasticity with respect to the contribution margin.
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