This study examines the properties of the degree of leverage, which is recognized as a measure of business risk based on cost structure. This paper also identifies the caveats and potential misunderstandings when using the degree of leverage for the purpose of comparing differences in business risk arising from differences in cost structure. To this end, the relationship between the cost structure of variable costs and fixed costs and the degree of leverage is analyzed within the framework of cost-volume-profit analysis. It is demonstrated that firms with high fixed costs and low variable costs per unit do not necessarily have a high degree of leverage. Even when fixed costs are high, if variable costs per unit are sufficiently low, the break-even point may be low, resulting in a lower degree of leverage. The degree of total leverage is high only when fixed costs are relatively large compared to the contribution margin per unit at a given sales volume level. The degree of financial leverage is greater only when the relative proportion of financial fixed costs (interest expenses) exceeds the relative proportion of operating income. Even in the absence of differences in financial fixed costs, differences in operating cost structure can lead to differences in the degree of financial leverage through differences in operating income. The variance of earnings, another measure of business risk based on cost structure, is determined solely by variable costs per unit, regardless of the magnitude of total fixed costs. Therefore, the degree of leverage and variance, both measures of risk, have no direct relationship with each other.