1 I. DOL
Let P = price per unit
V = variable cost per unit
F = total fixed cost
Q = quantity of goods sold
The definition of DOL can be defined as:
2 II. DFL
Let i = interest rate on outstandinf debt
D = outstanding debt
iD = interest payment on dept
N = the total number of shares outstanding
π = corporate tax rate
The definition of DFL can be defined as:
3 III. DCL (degree of combined leverage) = DOL × DFL
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© 2006 Springer Science+Business Media, Inc.
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Lee, CF., Lee, A.C. (2006). Derivation of DOL, DFL and DCL. In: Lee, CF., Lee, A.C. (eds) Encyclopedia of Finance. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-26336-6_78
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DOI: https://doi.org/10.1007/978-0-387-26336-6_78
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