Finance

Degree of Operating Leverage (DOL) Calculator

Measure how a percentage change in sales translates into a percentage change in operating income.

Revenue ($)

Variable Costs ($)

Fixed Costs ($)

Formula:
DOL = Contribution Margin / Operating Income
Contribution Margin = Revenue − Variable Costs
Operating Income (EBIT) = CM − Fixed Costs
If sales ↑ 10% → EBIT ↑ (10% × DOL)

Understanding Operating Leverage

DOL measures how sensitive operating income is to changes in sales volume. A high DOL means small sales changes create large profit swings — great in booms, risky in downturns.