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Combined Leverage

15-15 Combined Leverage

Combined Leverage lets you calculate the combined effects of operation and financial leverages.

Combined Leverage Fields

The following fields appear on the Combined Leverage calculation page.

Field

Description

SAL

Amount obtained from sales

VC

Variable cost for this level of production

FC

Fixed costs

INT

Interest to be paid to bondholders

DCL

Degree of combined leverage

kExample

Calculate the Combined Leverage ([DCL]) for a company with variable costs ([VC]) of

$6,000, fixed costs ([FC]) of $2,000, and sales ([SAL]) of $12,000, of which $1,000 is paid to bondholders ([INT]).

•You can also calculate variable costs ([VC]), fixed costs ([FC]), sales ([SAL]), or the amount or paid to bondholders ([INT]) by inputting the other four values and tapping the button for the result you want.

Calculation Formulas

DCL =

SAL – VC

 

SAL – VC – FC – ITR

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