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What Is Combined Leverage

COMBINED LEVERAGE DEFINITION AND MEANING

When the company uses both financial and operating leverage to magnification of any change in sales into a larger relative changes in earning per share. Combined leverage is also called as composite leverage or total leverage.

Combined leverage express the relationship between the revenue in the account of sales and the taxable income.

finance
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Combined leverage can be calculated with the help of the following formulas:

CL = OL × FL

CL = C/OP x OP/PBT = C/PBT

Where,

CL = Combined Leverage

OL = Operating Leverage

FL = Financial Leverage

C = Contribution

OP = Operating Profit (EBIT)

PBT = Profit Before Tax

What Is Combined Leverage What Is Combined Leverage Reviewed by Ikpokolo Francis on Wednesday, June 07, 2017 Rating: 5

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