Profit Leverage Effect (PLE) Calculator

Calculate Profit Leverage Effect (PLE)



Formula

The formula to calculate the Profit Leverage Effect (PLE) is:

\[ \text{PLE} = \frac{\text{CS}}{\text{CP}} \]

Where:

Definition

Example

Let's say the cost savings (CS) is $10,000 and the current profit (CP) is $50,000. Using the formula:

\[ \text{PLE} = \frac{10,000}{50,000} = 0.20 \]

So, the profit leverage effect (PLE) is 0.20, indicating a 20% increase in profit due to the cost savings.