understanding financial jargon
The ratio of a company's fixed assets to variable costs is called operational gearing (also known as operational leverage). High operational gearing makes a company's profits more sensitive to both an upturn or downturn in sales. Many companies such as high street banks, retailers, airlines and similar 'property and staff' heavy companies suffer from this magnifying effect on the change in profits.
For an eample of how operational gearing affects profits please see Operational Leverage
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
We hope you found this information useful.
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