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Karnivesh

Simplifying finance.... • 23d

Operating leverage is one of those business concepts that looks harmless until conditions change. When fixed costs are high, growth feels powerful. Revenues rise faster than expenses, margins expand, and confidence builds. But the same structure turns fragile when demand slows. A small dip in revenue can lead to a disproportionate hit on profits. What I’ve learned to watch for 👇 • 📊 How much of the cost base is fixed vs flexible • 📉 Whether profits fall faster than revenue in slowdowns • 🧱 If scale adds resilience or just rigidity 📌 Key insight: Operating leverage amplifies outcomes both good and bad. The strongest businesses are designed to grow and slow down without breaking. 👉 I’ve explored this in detail in my Substack article. Read the full piece in the attached link.

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