Question

How to calculate operating leverage from financial statements?

Answer 1

Steps

Calculate contribution margin. The contribution margin is total sales less variable expenses. ...

• Calculate operating income. Operating income is the total sales less all operating expenses except interest and taxes. ...

Calculate operating leverage. Divide the contribution margin by the operating income.

Answer 2

Answer:

• Calculate contribution margin. The contribution margin is total sales less variable expenses. ...
• Calculate operating income. Operating income is the total sales less all operating expenses except interest and taxes. ...
• Calculate operating leverage. Divide the contribution margin by the operating income.