A company with high operating leverage will experience a larger reduction in net operating income in a period of declining sales than a company with low operating leverage.

Operating leverage is the degree to which a company's operating costs are fixed rather than variable. A high operating leverage means that a larger portion of a company's costs are fixed, which can lead to higher profits in times of increased sales. However, in times of declining sales, the fixed costs remain the same, resulting in a larger reduction in net operating income compared to a company with low operating leverage.