Operational gearing: related pages

Break-even

The break-even point is the level of sales (revenues or volumes) needed to cover the fixed costs; the level of sales at which neither a profit or loss is made.

Fixed costs

Costs that do not change with the level of sales.

Variable costs

On the other hand variable costs change with sales. Examples of variable costs are raw materials, shipping and depletion.

Gearing

A measure of the extent to which a company is funded by debt.

Sale and leaseback

The sale of assets followed by their lease back to the seller.