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Unformatted text preview: losses in bad years b. Low FC, high VC greater stability in income, protected in bad years, but less income in good years VIII. Operating Leverage How sensitive is NOI to change in sales? o High small change in sales creates a much larger increase in NOI. Most dramatic around BEP Formula: CM/NOI Example: V = 4 (40,000/10,000) F = 7 (70,000/10,000) V = NOI will grow 4x faster than sales F = NOI will grow 7x faster than sales ie. If sales increase by 10%, NOI will increase by 40 or 40%...
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- Spring '08