Question

does operating leverage influence financing leverage?

Answer 1

Yes, Operating Leverage does influence financing leverage. Operating Leverage shows the changes in Earnings before Interest and tax (EBIT) in relations to the changes in sales of the organization when the operational costs are fixed and fiance leverage shows the changes in Earnings per share (EPS) as the EBIT changes where the costs involved are of fixed nature and concerned with the finance costs only such as Interest Cost.

This way when the Operating leverage is found out we are actually preparing the basis of Finance Leverage