Total Leverage

Description

In finance, leverage is a general term for any technique to multiply gains and losses. Financial leverage tries to estimate the percentage change in net income for a one-percent change in operating income. Operating leverage is an attempt to estimate the percentage change in operating income for a one-percent change in revenue.The product of the two is called Total leverage, and estimates the percentage change in net income for a one-percent change in revenue.[

Related formulas

Variables

TLTotal Leverage (dimensionless)
OLOperating Leverage (dimensionless)
FLFinancial Laverage (dimensionless)