How to calculate the degree of financial leverage？
425 播放时长：220
加载播放器...
How to calculate the degree of financial leverage？
The degree of financial leverage (DFL) can be calculated using the following formula:
DFL = EBIT / EBIT - Interest
Where EBIT is earnings before interest and taxes, and Interest is the interest expense.
For example, if a company has an EBIT of $500,000 and an interest expense of $100,000, the DFL would be:
DFL = $500,000 / ($500,000 - $100,000) = 1.25
This means that for every 1% increase in EBIT, the company's earnings per share (EPS) will increase by 1.25%. A higher DFL indicates that the company has a higher level of financial risk and is more sensitive to changes in EBIT.
DFL = EBIT / EBIT - Interest
Where EBIT is earnings before interest and taxes, and Interest is the interest expense.
For example, if a company has an EBIT of $500,000 and an interest expense of $100,000, the DFL would be:
DFL = $500,000 / ($500,000 - $100,000) = 1.25
This means that for every 1% increase in EBIT, the company's earnings per share (EPS) will increase by 1.25%. A higher DFL indicates that the company has a higher level of financial risk and is more sensitive to changes in EBIT.
CFA考试视频How to calculate the degree of financial leverage？CFA一级视频