Which of the following mathematical equations is used to calculate the degree of operating leverage (DOL)? (Δ = change)
A)DOL = % Δ in net operating income (NOI)/% Δ in sales
B)DOL = % Δ in sales/% Δ in earnings before taxes (EBT)
C)DOL = % Δ in earnings before interest and taxes (EBIT)/% Δ in earnings per share (EPS)
D)DOL = % Δ in sales/% Δ in earnings per share (EPS)
E)DOL = % Δ in earnings per share (EPS)/% Δ in earnings before taxes (EBT)

Question

Quizplus · Accepted Answer

DOL is calculated as the % Δ in net operating income (NOI) divided by the % Δ in sales. This equation helps to identify the impact of changes in sales on the operating income of a company.

Which of the Following Mathematical Equations Is Used to Calculate