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Operating Leverage Calculator

Measure the Degree of Operating Leverage (DOL) to understand how sensitive your operating income is to changes in sales volume.

Total revenue ($)

Total variable costs ($)

Total fixed costs ($)

Expected sales change (%)

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Frequently Asked Questions

What is operating leverage?

Operating leverage measures the ratio of fixed costs to variable costs. High operating leverage means a small change in sales causes a large change in operating profit (EBIT).

What is the DOL formula?

DOL = Contribution Margin / EBIT = (Revenue − Variable Costs) / (Revenue − Variable Costs − Fixed Costs).

Is higher or lower DOL better?

High DOL amplifies gains in good times but also amplifies losses in downturns. Companies with stable, predictable revenue can handle high DOL. High-volatility businesses prefer lower DOL.