Which of the following is the correct mathematical expression of the degree of operating leverage (DOL)? (ÄQ is the change in volume)
A) DOL = %ÄEBT $\div$ %ÄQ
B) DOL = %ÄEBIT $\div$ %ÄQ
C) DOL = %ÄQ $\div$ %ÄEBIT
D) DOL = %ÄQ $\div$ %ÄEBT

Question

Which of the following is the correct mathematical expression of the degree of operating leverage (DOL)? (ÄQ is the change in volume)
A) DOL = %ÄEBT $\div$  %ÄQ
B) DOL = %ÄEBIT $\div$  %ÄQ
C) DOL = %ÄQ $\div$  %ÄEBIT
D) DOL = %ÄQ $\div$  %ÄEBT

Quizplus · Accepted Answer

The correct expression for the degree of operating leverage (DOL) is %ÄEBIT / %ÄQ. Option B provides this expression, while the other options contain either incorrect calculations or use the wrong financial measure (such as using %ÄEBT instead of %ÄEBIT).

Which of the Following Is the Correct Mathematical Expression of the Degree