Result
Degree of total leverage (DTL)
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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
DTL (Degree of Total Leverage) = DOL × DFL, where DOL = contribution margin ÷ operating profit, and DFL = operating profit ÷ (operating profit − loan interest). Total leverage shows how many times a percentage change in sales volume gets amplified in the percentage change of profit that ultimately reaches owners — after both fixed operating costs and interest on debt.
The higher the DTL, the more the business depends on stable sales: a small revenue drop at a company with high total leverage (lots of fixed costs and lots of debt financing) turns into a much sharper drop in owners' profit than at a company with low leverage.
If you only need operating leverage without debt, use the separate operating leverage calculator; if you only need financial leverage without the operating cost structure, use the separate financial leverage calculator.