Paxton Corp has provided the following data concerning its operations last month:

Paxton Corp is a retailing organization.
-What is the degree of operating leverage?

Question

Paxton Corp has provided the following data concerning its operations last month:

Paxton Corp is a retailing organization.
-What is the degree of operating leverage?

Quizplus · Accepted Answer

The degree of operating leverage (DOL) is calculated as the percentage change in operating income (EBIT) divided by the percentage change in sales. A DOL of 3 indicates that a 1% change in sales will result in a 3% change in operating income.

Paxton Corp Has Provided the Following Data Concerning Its Operations