![]() Read more: How has Dana-Farber shortened their budget cycle by 40 per cent? Step 7: Employ appropriate budgeting methodĪgain, there is no one way to set a budget. The higher the operating leverage, the more likely your business is exposed to uncalculated risk. Managing these costs is important in part because operating leverage, simply defined by the ratio of fixed to variable costs, needs to be balanced out otherwise the company would be subject to risks and uncertainties. For example, variable costs make up most of the spending of consulting firm where consultants and their commission are responsible for the lion’s share of costs.
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