Insert the information in the form and the calculator will determine the degree of operating leverage.


What is the degree of operating leverage?


The degree of operating leverage (DOL) is a measurement of how much of the firm's perating income changes in response to a change in sales. Simply it supports the analysts in measuring the effect of the cahnge in sales on a company's earnings.


How to calculate degree of operating leverage?


To calculate degree of operating leverage you should use the following formula:
degree of operating leverage = EBIT / operating revenue


Why use degree of operating leverage?


Analysts use degree of operating leverage because it helps them determine what the effect of a change in sales will be on the firm's earnings. High degree of operating leverage indicates a high sensitive company's earnings to changes in sales.


Other people also used:

Efficiency Ratio

It's a measurement of the firm's ability to use it's assets to generate income.

Financial Leverage

It's the strategic attempt of borrowing money to invest in assets and get the return on those assets to exceed the cost of borrowing them.

Fixed Charge Coverage Ratio

It's a measurement of a firm's capacity to meet fixed charge obligations such as lease expenses and interest expenses.

Gross Margin Percentage

It's the percentage of a company's revenue that is retained after direct expenses like materials and labor.

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