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Leverage

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A firm has 40,000,000 in revenues, 12,500,000 in fixed costs, 10,250,000 in variable costs and interest of 2,000,000. Compute DOL, DFL, and DCL.

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Solution Summary

The solution computes the degree of operating leverage (DOL), degree of financing leverage (DFL), and degree of combined leverage (DCL).

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A firm has 40,000,000 in revenues, 12,500,000 in fixed costs, 10,250,000 in variable costs and interest of 2,000,000.Compute DOL, DFL, and DCL.

Revenue $40,000,000
Less: Variable costs 10,250,000
Contribution 29,750,000

Fixed costs 12,500,000

Earnings before ...

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