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Degree of operating leverage = contribution ÷ operating profit. A DOL of 2 means a 10% sales change moves profit ~20%.
How to use it
Enter your contribution (sales minus variable costs) and your operating profit. The result is your degree of operating leverage — a multiplier that tells you how sensitive profit is to a change in sales.
High operating leverage — lots of fixed cost — means a small rise in sales flows powerfully to profit, but a small fall hurts just as hard. Low leverage is steadier. Knowing yours helps you judge how much of a downturn you can absorb.
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Frequently asked questions
Is high operating leverage good or bad?
Neither on its own. It's great when sales are rising and risky when they fall. Capital-heavy businesses run high leverage; service firms with mostly variable costs run low. Match it to how stable your demand is.
What's contribution again?
Sales minus the costs that vary with each sale — materials, delivery, transaction fees. What's left contributes to covering fixed costs and then to profit. The contribution margin calculator works it out as a percentage.
Is this a quote?
No — it's a free illustration. Your actual Credit Corp offer depends on an assessment of your company.
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