Combined leverage:A leverage ratio that summarizes the combined
effect the degree of operating leverage (DOL), and the degree of financial
leverage has on earnings per share (EPS), given a particular change in sales.
This ratio can be used to help determine the most optimal level of financial
and operating leverage to use in any firm. For calculation, the formula is:
Degree of Combined Leverage = %Change in EPS / %Change in Sales
Degree of Combined Leverage = Degree of Operating Leverage * Degree of
Financial Leverage
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