COMBINED LEVERAGE - Accounts and Finance for Managers

It is the combination of both leverage viz Operating leverage and financial leverage. The combination means that the product of both leverages viz operating risk and financial risk, which facilitates to determine the total risk of the firm.

DCL (Base)=
% change in EPS
% change in Sales

Combined Leverage Meaning

The combined leverage is nothing but % change in the sales volume of the firm leads to certain % change in the EPS.
DCL = Contribution/EBIT–I

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