A firm that has a 2.5 DOL (degree of operating leverage) would find that an 8% increase in EBIT would result from a ____ increase in sales.
A) 3.2%
B) 5.4%
C) 20.0%
D) 2.0%

Question

Quizplus · Accepted Answer

The degree of operating leverage (DOL) indicates the percentage change in EBIT for a given percentage change in sales. With a DOL of 2.5, an 8% increase in EBIT results from a 3.2% increase in sales (8% / 2.5 = 3.2%).

A Firm That Has a 2