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Degree of Operating Leverage Formula

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The Degree of Operating Leverage is a leverage ratio that summarizes the effect a particular amount of operating leverage has on a company's earnings before interest and taxes over a period of time. Check FAQs

DOL = \frac{%ΔEBIT}{%ΔSales}

DOL - Degree of Operating Leverage?%ΔEBIT - % Change in EBIT?%ΔSales - % Change in Sales?

Degree of Operating Leverage Example

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Here is how the Degree of Operating Leverage equation looks like with Values.

Here is how the Degree of Operating Leverage equation looks like with Units.

Here is how the Degree of Operating Leverage equation looks like.

1.7333 = \frac{78}{45}

1.7333 = \frac{78}{45}

1.7333 = \frac{78}{45}

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Degree of Operating Leverage Solution

Follow our step by step solution on how to calculate Degree of Operating Leverage?

FIRST Step Consider the formula

DOL = \frac{%ΔEBIT}{%ΔSales}

Next Step Substitute values of Variables

∴

DOL = \frac{78}{45}

Next Step Prepare to Evaluate

∴

DOL = \frac{78}{45}

Next Step Evaluate

∴

DOL = 1.73333333333333

LAST Step Rounding Answer

∴

DOL = 1.7333

Degree of Operating Leverage Formula Elements

Variables

Degree of Operating Leverage

The Degree of Operating Leverage is a leverage ratio that summarizes the effect a particular amount of operating leverage has on a company's earnings before interest and taxes over a period of time.

Symbol: DOL

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Degree of Operating Leverage

% Change in EBIT

% Change in EBIT is the percentage change in EBIT from one time period to another.

Symbol: %ΔEBIT

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find % Change in EBIT

% Change in Sales

% Change in Sales is the percentage change in sales from one time period to another.

Symbol: %ΔSales

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find % Change in Sales

Other formulas in Leverage Ratios category

Go Degree of Financial Leverage

DFL = \frac{EBIT}{EBIT - I}

Go Degree of Combined Leverage

DCL = DOL \cdot DFL

Go Financial Leverage

FL = \frac{TD}{TSE}

How to Evaluate Degree of Operating Leverage?

Degree of Operating Leverage evaluator uses Degree of Operating Leverage = % Change in EBIT/% Change in Sales to evaluate the Degree of Operating Leverage, The Degree of Operating Leverage (DOL) is a leverage ratio that summarizes the effect a particular amount of operating leverage has on a company's earnings before interest and taxes (EBIT) over a period of time. Degree of Operating Leverage is denoted by DOL symbol.

How to evaluate Degree of Operating Leverage using this online evaluator? To use this online evaluator for Degree of Operating Leverage, enter % Change in EBIT (%ΔEBIT) & % Change in Sales (%ΔSales) and hit the calculate button.

FAQs on Degree of Operating Leverage

What is the formula to find Degree of Operating Leverage?

The formula of Degree of Operating Leverage is expressed as Degree of Operating Leverage = % Change in EBIT/% Change in Sales. Here is an example- 1.733333 = 78/45.

How to calculate Degree of Operating Leverage?

With % Change in EBIT (%ΔEBIT) & % Change in Sales (%ΔSales) we can find Degree of Operating Leverage using the formula - Degree of Operating Leverage = % Change in EBIT/% Change in Sales.

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Degree of Operating Leverage Formula

Degree of Operating Leverage Example

Degree of Operating Leverage Solution

Degree of Operating Leverage Formula Elements

Other formulas in Leverage Ratios category

How to Evaluate Degree of Operating Leverage?

FAQs on Degree of Operating Leverage

Variable Name