Total Leverage Calculator





Formula

The formula to calculate the total leverage is:

\[ TL = DOL \times DFL \]

Where:

What is Total Leverage?

Total leverage is a measure that combines the effects of operating leverage and financial leverage. It indicates how sensitive a company's earnings per share (EPS) are to changes in sales.

Example Calculation

Example 1:

Step 1: Multiply the degree of operating leverage by the degree of financial leverage:

\[ TL = 3 \times 2 = 6 \]

Example 2:

Step 1: Multiply the degree of operating leverage by the degree of financial leverage:

\[ TL = 4 \times 1.5 = 6 \]