Lesson: Operating and Financial Leverage

In this lesson, Nick Palazzolo, CPA, provides an insightful look into the world of operating leverage through real-world examples. He unpacks the fiscal struggles businesses have faced and illustrates the concept by comparing the operating leverage of Delta Airlines not only with a direct industry competitor like American Airlines but also with a player from the retail sector, Home Depot. Nick breaks down the fixed costs inherent in both industries and shows why these comparisons are critical for understanding a company's operating leverage. By using these case studies, Nick clarifies the impact of fixed versus variable costs and their role in a company's financial operations.