User's Manual

20060301

15-13-1

Operating Leverage

15-13 Operating Leverage

Operating leverage lets you calculate the degree of change in net earnings arising from a

change in sales amount.

Operating Leverage Fields

The following ﬁelds appear on the Operating Leverage calculation page.

Field Description

SAL Amount currently obtained from sales

VC Variable cost for this level of production

FC Fixed costs

DOL Degree of operating leverage

Example

What is the degree of operating leverage for a company with sales ([SAL]) of $1,200,000,

variable costs ([VC]) of $600,000, and ﬁxed costs ([FC]) of $200,000?

• You can also calculate sales amount ([SAL]), variable costs ([VC]), or ﬁxed costs ([FC]) by

inputting the other three values and tapping the button for the result you want.

Calculation Formulas

SAL – VC – FC

DOL =

SAL – VC

DOL – 1

SAL =

FC = SAL – FC –

DOL × VC + DOL × FC – VC

DOL

SAL – VCL