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    ParrotBird48516's Avatar
    ParrotBird48516 Posts: 28, Reputation: 1
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    #1

    Jun 27, 2012, 05:51 PM
    Operating Leverage Formula
    What is the formula for operating leverage please?

    I found this on a website:

    Operating Leverage = [Quantity x (Price - Variable Cost per Unit)] / Quantity x (Price - Variable Cost per Unit) - Fixed Operating Cost

    However the brackets confuse me and my calculations don't seem to match the one on the website's example. It looks like something being divided by the same something (creating 1) and then subtracting something that will give a negative answer!

    Please help!
    ParrotBird48516's Avatar
    ParrotBird48516 Posts: 28, Reputation: 1
    New Member
    		  
    #2

    Jun 27, 2012, 08:16 PM
    Quote Originally Posted by ParrotBird48516 View Post
    What is the formula for operating leverage please?

    I found this on a website:

    Operating Leverage = [Quantity x (Price - Variable Cost per Unit)] / Quantity x (Price - Variable Cost per Unit) - Fixed Operating Cost

    However the brackets confuse me and my calculations don't seem to match the one on the website's example. It looks like something being divided by the same something (creating 1) and then subtracting something that will give a negative answer!

    Please help!
    I worked it out in the end! Thanks!
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
    Ultra Member
    		  
    #3

    Jun 28, 2012, 02:34 AM
    I would like it all to be this easy
    ParrotBird48516's Avatar
    ParrotBird48516 Posts: 28, Reputation: 1
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    #4

    Jun 28, 2012, 07:17 AM
    So would I paraclete! Took my time and didn't over-think!!
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