A firm with a higher degree of operating leverage is considered less risky than a comparable firm with a lower degree of operating leverage.
The degree of operating leverage measures how sensitive a firm's profits are to changes in its sales volume. A higher degree of operating leverage indicates that a firm has a higher proportion of fixed costs compared to variable costs. In general, a firm with a higher degree of operating leverage is considered riskier because it has a higher breakeven point and is more exposed to changes in sales volume. On the other hand, a firm with a lower degree of operating leverage has a lower breakeven point and is less sensitive to changes in sales volume, making it less risky.