What is the difference among Operating vs. Financial Leverage?

  1. profile image46
    Joe39posted 6 years ago

    What is the difference among Operating vs. Financial Leverage?

    How does leverage helps the organization in increasing Earnings Before Interest and Taxes (operating) and Earnings Per Share (Financial)?

  2. reena_yadav profile image78
    reena_yadavposted 6 years ago

    The operating leverage is a measure of how revenue growth translates into operating income growth. It is basically a measure of leverage and how risky or volatile a company's operating income is.

    Financing leverage, on the other hand, is a general term for any technique to multiply gains and losses. The common ways for attaining leverage is by borrowing money, buying fixed assets and using derivatives.

 
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