The Finnish company Rovio Entertainment Corporation that produces and sells the game Angry Birds, following years of falling earnings, job cuts and divestments announced that its revenue increased 34% in 2016 to 190 million euros ($201 million dollars). According to Rosendahl, the operating result improved to a profit of 17.5 million euros from a loss of 21 million in 2015, increasing earnings by 83% (Rosendahl, 2017). In 2015, Rovio Entertainment Corporation announced that its revenues for 2014 decreased nine percent compared to those of 2013; even worse, its earnings had decreased by 73%.

After reading Forbes' Investing Newsletter, explain why relatively small changes in companies' revenues can result in relatively large changes in their earnings or losses. In other words, if a company's sales increase 12%, why do its earnings not also increase 12%?