Economics & Sociology
ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789XIndex PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
| Title: | Operating Risk of Polish Public Companies – Sectoral Differences |
| Issue: |
Vol. 10, No 1, 2017
Published date: 03-2017 (print) / 03-2017 (online) |
| Journal: |
Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459 |
| Authors: |
Sławomir Kalinowski
Poznań University of Economics |
| Keywords: | operating risk, degree of operating risk |
| DOI: | 10.14254/2071-789X.2017/10-1/2 |
| Index PUBMS: | b95f458d-003d-11e8-94c4-fa163e5d4f72 |
| Language: | English |
| Pages: | 22-34 (13) |
| JEL classification: | G30 |
| Website: | http://www.economics-sociology.eu/?467,en_operating-risk-of-polish-public-companies-%E2%80%93-sectoral-differences |
| Licenses: |
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All companies which have to pay fixed costs face the problem of operating risk measured by operating leverage. In the case of sales growth (fall), the mechanism of operating leverage accelerates a rise (decrease) in operating profit. The strength of the impact of the operating leverage effect depends on the share of fixed costs in the structure of operating costs. The bigger the share, the stronger the change in the sale volume multiplies the change in operating profit. This is the reason why companies that are heavily burdened by fixed costs, specifically depreciation, should be characterized as those having a higher level of operating risk. The aim of the research the results of which are presented in this article was to test two hypotheses: firstly, production companies are characterized by a higher level of operating risk than service and trade enterprises and, secondly, the lowest level of operating risk characterizes trade companies.
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