How to calculate the degree of operating leverage？

The degree of operating leverage (DOL) can be calculated using the following formula:

DOL = % change in operating income / % change in sales

To calculate the DOL, you need to know the percentage change in operating income and the percentage change in sales. The percentage change in operating income can be calculated by subtracting the current operating income from the previous operating income and dividing the result by the previous operating income. The percentage change in sales can be calculated by subtracting the current sales from the previous sales and dividing the result by the previous sales.

Once you have these numbers, you can plug them into the formula to calculate the DOL. The resulting number will tell you the extent to which changes in sales will affect operating income. A higher DOL indicates that a small change in sales will result in a larger change in operating income, while a lower DOL indicates that a larger change in sales is required to have the same impact on operating income.