Result
Degree of financial leverage (DFL)
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
DFL (Degree of Financial Leverage) = EBIT ÷ (EBIT − loan interest). It shows how many times a percentage change in operating profit gets amplified in the percentage change of profit left for owners after interest: the more fixed interest payments relative to EBIT, the higher the DFL.
This is an income-statement metric — the 'leverage' here measures profit sensitivity to interest load, not the balance-sheet capital structure. If you need the balance-sheet debt load (debt relative to equity), use the separate Debt/Equity calculator.
DFL multiplies by operating leverage (DOL) to give total leverage (DTL) — the overall sensitivity of owners' profit to a change in sales volume. To compute DTL directly, use the separate total leverage calculator.