1.Following information calculate degree of operating Leverage , % change in sales -27%, % change in EBIT -25%, % Change in EPS - 30 %*2 points0.931.230.123
Question
1.Following information calculate degree of operating Leverage , % change in sales -27%, % change in EBIT -25%, % Change in EPS - 30 %*2 points0.931.230.123
Solution
The Degree of Operating Leverage can be calculated using the formula:
Degree of Operating Leverage = % Change in EBIT / % Change in Sales
Given the information:
% Change in Sales = -27% % Change in EBIT = -25%
We can substitute these values into the formula:
Degree of Operating Leverage = -25% / -27% = 0.93
So, the Degree of Operating Leverage is 0.93.
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