This leverage calculator help you to quantify a company exposure to operational risk, financial risk and a combination of the operational risk, financial risk.
Degree of Operating Leverage(DOL) Formula
DOL assists a firm in quantifying its operational risk, i.e., the risk arising from its mix of fixed and variable costs.
Q = the number of units
P = the price per unit
V = the variable operating cost per unit
F = the fixed operating cost
P - V = the per unit contribution margin
Q (P - V) = the contribution margin
Degree of Financial Leverage(DFL) Formula
DFL assists a firm in quantifying its financial risk, i.e., the risk relating to how the firm finances its operations.
Degree of Total Leverage(DTL) Formula
DTL is a measure of the sensitivity of the firn net income to changes in the number of units produced and sold.