Leverage refers to the use of fixed costs to increase the return to shareholders. Operating leverage is the use of fixed operating costs such as fixed cost of goods sold and depreciation to magnify the earnings before interest and taxes. The degree of operating leverage (DOL)=% change in EBIT /% change in Sales. Financial leverage refers to the use of fixed financing costs such as long-term debts to magnify the return to shareholders. The degree of financial leverage (DFL) =% change in EPS / \% change in EBIT. And the degree of total leverage =% change in EPS /% change in sales or DTL=DOLDFL. Use the following information to calculate the degrees of leverages. 1. 2.6 2. 2.9 3. 3.8 DOL= 4. 5.5 5. 1.6 DFL= 6. 0.7 DTL= 7. 4.2 8. 3.3 9. 1.0 10. 2.0