LEVERAGE

Question 1

DEGREE OF LEVERAGE

Answer 1

PRE-FIXED COST INCOME AMOUNT / POST-FIXED COST INCOME AMOUNT

Question 2

DEGREE OF OPERATING LEVERAGE (DOL) FOR SINGLE PERIOD

Answer 2

CONTRIBUTION MARGIN / EBIT

NOTE: COMPARES CONTRIBUTION MARGIN AND VARIABLE BASIS OPERATING INCOME FOR A SINGLE PERIOD

Question 3

DEGREE OF OPERATING LEVERAGE (DOL) FOR MULTIPLE PERIODS

Answer 3

%Δ IN EBIT / %Δ IN SALES

NOTE: THIS VERSION IS NECESSARY WHEN THE ONLY FINANCIAL REPORTS AVAILABLE ARE THOSE PREPARED ON ABSORPTION BASIS

Question 4

DEGREE OF FINANCIAL LEVERAGE (DFL) FOR SINGLE PERIOD

Answer 4

EBIT / EBT

Question 5

DEGREE OF FINANCIAL LEVERAGE (DFL) FOR MULTIPLE PERIODS

Answer 5

%Δ IN NET INCOME / %Δ IN EBIT