Busıness Fınance I Deneme Sınavı Sorusu #830338
Which of the following sentences could be true if a company has DOL of 2?
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If EBIT rises by 1%, then EPS will rise by 2%. |
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If EBIT rises 2%, then EPS will rise by 2%. |
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If sales rises 1%, then EPS will rise by 1%. |
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If sales will rise 1%, then EBIT will rise by 2%. |
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If EBIT will rise 2%, then sales will rise by 2%. |
The degree of operating leverage is a concept widely used to assess the operating risk of a business stemming from its cost structure. Basically, the degree of operating leverage shows how much the operating income of the business changes with a relative change in its sales. In fact it is a multiple depicting how many times the operating income of a business changes in relation to a percentage change in the sales.
Degree of OperatingLeverage(DOL) = %?EBIT / %?Sales
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