Operating Leverage

How far profit moves for a given move in revenue, which depends on how much of the cost base is fixed. A business whose costs follow its ships, its stores or its staff rather than each unit sold keeps most of any rise in price and absorbs most of any fall. One way to read it: the percentage change in EBITDA for a 1% change in price is revenue over EBITDA, so a company earning a 20% margin moves five times as fast as its price.