What this calculator does
Degree of operating leverage (DOL) works out how much operating profit swings for a given swing in sales, given a company’s fixed cost base. Enter your own figures above and the answer updates as you type: nothing is fixed in the code, so the result reflects exactly the numbers you supply.
The formula this calculator evaluates is printed under the tool and explained below, so you can check the working by hand or reuse it in a spreadsheet.
The formula
The inputs explained
| Field | What to enter |
|---|---|
| Sales revenue ($) | A number, measured in your currency. Starts at 1000000. |
| Variable costs ($) | A number, measured in your currency. Starts at 600000. |
| Fixed costs ($) | A number, measured in your currency. Starts at 250000. |
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How the answer changes with sales revenue
Every other input is held at the calculator’s starting values while sales revenue varies. Select any row to load that scenario into the calculator.
| Sales revenue ($) | Degree of operating leverage | Contribution margin | EBIT (operating profit) |
|---|---|---|---|
| 500,000 | 0.29× | −$100,000.00 | −$350,000.00 |
| 750,000 | -1.50× | $150,000.00 | −$100,000.00 |
| 1,000,000 | 2.67× | $400,000.00 | $150,000.00 |
| 1,500,000 | 1.38× | $900,000.00 | $650,000.00 |
| 2,000,000 | 1.22× | $1,400,000.00 | $1,150,000.00 |
| 3,000,000 | 1.12× | $2,400,000.00 | $2,150,000.00 |