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Fundamental Analysis & Valuation

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Fundamental Analysis & Valuation

Operating Leverage

The degree to which a company's fixed costs amplify the effect of a revenue change on its operating profit.

Degree of Operating Leverage = Percentage Change in Operating Profit / Percentage Change in Revenue ratio (x, times) Fundamental Analysis & Valuation

Operating Margin

Operating profit as a percentage of revenue, showing what the core business keeps before interest and tax.

Operating Margin = Operating Profit (EBIT) / Revenue x 100 %