A firm which has a 2.5 DOL (degree of operating leverage)would find that an 8% increase in EBIT would result from a(n)____ 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) measures 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 Which Has a 2