Operating leverage and degree of financial leverage
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Degree of operating leverage (DOL)
%∆EBIT/%∆Sales or (sales-cost of sales)/EBIT
DFL
%∆EBT/%∆EBIT
Degree of combined leverage (DCL)
DOL x DFL
DOL
business risk
DFL
financial risk
DOL > 1.0
high level of fixed cost, high business risk