DOL, DFL, DTL

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cjones65

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Sorry for the amateurish question, but what's typically considered "normal" for operating, financial, and total leverage?
 
This is going to depend largely on the industry and sector you are looking at, among other things.
 
Heavy industrial services -- high fixed costs
 
Here are the numbers, but I'm not sure what they mean

DOL 1.20
DFL 1.05
DTL 1.26

Another question: what does it mean when these are volatile year after year? Say year 1 it had DTL of 1.8, then 0.9 for year two, then 1.26 the third year?



Edited 2 time(s). Last edit at Thursday, January 8, 2009 at 04:01PM by cjones65.
 
DFL = %change in net income / %change in operating income

DOL = %change in operating income / %change in sales

DTL = DFL*DOL = %change in net income / %change in sales

You would expect that there would be variations from year-to-year which should average out over the long-term.
 
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