Contribution margin =PVC Break-even =FC/ Contribution margin Degree of Operating Leverage (DOL) DOL= percent change in operating income / percent change in unit volume DOL=Q(PVC)/Q(PVC)FC Degree of Financial Leverage (DFL) DFL= percent change in EPS/ percent change in EBIT DFL=EBIT/(EBITI) Degree of Combined Leverage (DCL) DCL= percent change in EPS / percent change in sales (or volume) DCL=Q(PVC)/Q(PVC)FC Tickets Sold YTD: 10,000,000 airline tickets Investor What is AA's degree of operating leverage? Chris 1.81 Correct! What about the degree of financial leverage? It looks like that is what led to the financial troubles Delta is currently facing? I know what you want to know next. Here is where we stand on combined leverage: Chris Incorrect, try again. Hint: Make sure you are applying the formula correctly. The information needed is available in the Materials section. Chris I know what you want to know next. Here is where we stand on combined leverage