Combined Leverage Calculator
Calculate the Degree of Total Leverage (DTL) combining operating and financial leverage effects.
Revenue & Costs
$500,000
$10,000$2,000,000
$300,000
$0$2,000,000
$100,000
$0$500,000
$20,000
$0$200,000
25%
0%50%
10%
-50%50%
Degree of Total Leverage (DTL)
2.50x
A 10% change in sales = 25.0% change in EPS
DOL
2.00x
Operating
DFL
1.25x
Financial
DTL
2.50x
Combined
Current Performance
Contribution Margin$200,000
Operating Income (EBIT)$100,000
EBT$80,000
Net Income$60,000
EPS$0.60
What-If: 10% Sales Change
New Revenue$550,000
New EBIT$120,000(+20.0%)
New Net Income$75,000
New EPS$0.75(+25.0%)
Combined Leverage Formula
DTL = DOL x DFL = Contribution Margin / EBT
DOL Component
Measures sensitivity of EBIT to sales changes due to fixed operating costs.
DFL Component
Measures sensitivity of EPS to EBIT changes due to fixed interest costs.
DTL Interpretation
Total effect of fixed costs. Higher DTL = higher risk and higher potential return.