Combined leverage integrates operating and financial leverage to evaluate a firm's total risk exposure. It measures the degree to which a company can magnify its earnings before interest and taxes (EBIT) and net income based on its sales levels.
Operating leverage measures how a company's fixed and variable costs impact its profit structure and business risk.
A comprehensive overview of the Degree of Combined Leverage (DCL), discussing its definition, formula, applications, and significance in determining a firm's optimal level of financial and operating leverage.
Operating leverage is a cost-accounting measure that indicates how a firm's operating income can be affected by changes in revenue. This article explores its definition, calculation methods, and practical applications.
