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Part 2: Degree of Operating and Financial Leverage

  • 1.  Part 2: Degree of Operating and Financial Leverage

    Posted 04-29-2019 06:03 AM
    ​Hello There,

    In Ratio analysis, I see two formulae for Degree of financial leverage and Operating leverage. Both formulae yields different answer. Is it common?

    Degree of Operating leverage :
    % Change in EBIT / % Change in Sales
    CM / EBIT

    Degree of Financial Leverage
    % Change in Net Income / % change in EBIT
    EBIT / EBT

    Thanks for your guidance.

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    Yugi
    Novi MI
    United States
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