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Degree of Operating Leverage


What is the degree of combined leverage (DCL)? A combined degree of leverage (DCL) is a leverage ratio that summarizes the combined effect of the degree of operating leverage (DOL) and the degree of financial leverage on earnings per share (EPS), given a change especially sales. This ratio can be used to help determine the …

What is the degree of operational leverage (DOL)? The degree of operating leverage (DOL) is a multiple that measures how much a company’s operating profit will change in response to a change in sales. Firms with a high proportion of fixed costs (or costs that do not change with production) to variable costs (costs that …

Fundamental analysis uses the degree of financial leverage (DFL) to determine the sensitivity of a company’s earnings per share (EPS) when there is a change in its earnings before interest and taxes (EBIT). When a business has a high DFL, it usually has high interest payments, which negatively impacts EPS. Degree of financial leverage DFL …

Text size Goldman Sachs strategist David kostin and the team notes that stocks with high operating leverage–Amazon.com (AMZN), Whole Foods Market (WFM), ConocoPhillips (COP), Yahoo! (YHOO), and FedEx (FDX) among them – will outperform if the US economy strengthens: Discussions with clients this week focused on economic growth, operating leverage and wage inflation. Goldman Sachs …

The following article is adapted from Motley Fool Million Dollar Wallet. When I make my biannual pilgrimage to our Wholesale Costco (Nasdaq: COT), I’m like a kid in a candy store. A recent trip was no different; I filled my basket with a huge box of Rice Krispies goodies and enough Advil to survive the …