Degree of Operating Leverage Calculator
Find out how sensitive a company’s operating income is to changes in sales by calculating its Degree of Operating Leverage (DOL).
What is Degree of Operating Leverage?
The Degree of Operating Leverage (DOL) measures how much a company’s operating income (EBIT) changes in response to a percentage change in sales. A higher DOL means operating income is more sensitive to sales swings, which usually points to a cost structure with more fixed costs relative to variable costs.
The Formula
DOL is calculated as Contribution Margin divided by Operating Income, where Contribution Margin equals Sales minus Total Variable Costs. A DOL of 2, for example, means a 10% increase in sales would produce roughly a 20% increase in operating income.
Note: This tool is for general financial planning and educational purposes only and is not a substitute for professional financial or accounting advice.