Degree of Total Leverage
Using the formulas for Degree of Operating Leverage (DOL) and Degree of Financial Leverage (DFL), we can calculate the degree of total leverage (DTL) for the firm as follows:
In the above formula, you can observe that if there are no fixed operating costs and fixed financing costs, there is no leverage, and DTL will be equal to 1.
Create Your Free Account
Create a free account to access this content and join our community of learners.
You'll get access to:
- Access the full tutorial
- Join our learning community
- Track your progress
- Bookmark content for later