Degree of Operating Leverage (DOL)

DOL = % change in operating income / % change in number of units sold

DOL = Q(P-V) / [Q(P-V) – F]

Q: quantity of units sold
P: price per unit
V: variable cost per unit
F: fixed operating costs

A measure of the operating risk of a company. This measure is the sensitivity of a firm’s EBIT to its sales, and is defined by the ratio of the percentage change in operating income, to the percentage change in units sold. 

See also: Degree of Financial Leverage, Degree of Financial Leverage, Degree of Total Leverage

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