CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

Degree of Total Leverage = DTL; Degree of Operating Leverage = DOL; Degree of Financial Leverage = DFL.

Which of the following is incorrect?
A. DOL = % change in EBIT / % change in sales
B. DTL = DOL * DFL
C. DFL = % change in EPS / % change in NI
Explanation: DOL = % change in EBIT / % change in sales
DCL (Degree of Combined Leverage) = % change in EPS / % change in sales
DFL = % change in EPS / % change in EBIT
DTL = DOL * DFL

User Contributed Comments 2

User Comment
Roberto88 Isn't it B the right one??
It's the definition of DTL. I do not get why B is wrong.
gradyf @Roberto88, the question is asking for the INCORRECT one
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