The question of the total leverage factor, what is the total leverage factor

Let's brush up on the knowledge of financial management. I don't let you forget it. I'll give you the idea, and you'll understand.

Find the changed total leverage, the total lever operating leverage * financial leverage, operating leverage bian gong ebit, pay attention, ebit bian gong-a (fixed cost), then a changes, the operating leverage will also change, so it is necessary to recalculate the operating leverage, that is, now the previous a is required, and because the financial leverage needs to be calculated to know i (interest), i is also required. According to the total leverage formula, the previous financial leverage can be calculated, 3 2 * the previous financial leverage, so it is equivalent to 2 Bian Gong EBIT according to the previous operating leverage, 2 800 * (1-40%) EBIT (EBIT), so as to find the EBIT, then how much is the previous A equal to, equal to the side item -A EBIT, then A can be obtained. Based on the previous financial leverage, i can be obtained.

Then the new operational and financial levers can be calculated. New operating leverage 800*(1-40%) 800*(1-40%)-a (original) - newly increased 80, new financial leverage 800*(1-40%)-a (original) - newly increased 80 800*(1-40%)-a (original) - newly increased 80-original i, after calculation, the two can be multiplied. I hope you take a good look, the ideas are all in it.

Total Leverage Factor: The product of the company's financial leverage coefficient and operating leverage factor.

Total leverage factor DTL = DFL * DOL = (EBIT+F) [ EBIT- I - D (1-R)]. The total leverage factor refers to the product of the company's financial leverage coefficient and the operating leverage factor. Where:

EBIT refers to earnings before interest and taxes, F refers to total fixed costs, I refers to interest, D refers to preferred dividends, and R refers to income tax rate.

Extended Materials: a. What is the total leverage factor.

The total leverage coefficient is the product of the company's financial leverage coefficient and the operating leverage coefficient, which directly examines the impact of changes in operating income on earnings per share, and is an indicator to measure the company's profitability per share.

Two. The significance of the total leverage factor.

The importance of total leverage for the company's management:

1.Under a certain cost structure and financing structure, when there is a change in operating income, the management can make a judgment on the impact of earnings per share, that is, estimate the impact of changes in operating income on earnings per share. For example, if a company's total leverage factor is 3, this means that for every doubling of revenue, earnings per share will increase (decrease) by 3 times.

2.The interrelationship between operating leverage and financial leverage is conducive to management's management of operational and financial risks. In other words, in order to control a certain total leverage factor, there can be many different combinations of operating and financial leverage.

For example, companies with high operating leverage can use a lower degree of financial leverage; Companies with low operating leverage can make use of financial leverage to a higher extent, etc. After considering all the relevant specific factors, it is up to the company to make the choice.

Three. The relationship between the leverage factor and the corresponding risk.

Operating leverage refers to the impact of changes in sales (amount) on EBIT at a certain percentage of fixed costs. It is generally expressed by the operating leverage factor. Operational risk refers to the risk of a change in EBIT due to operational reasons.

That is, due to the operating leverage, when sales decline, the EBIT of the enterprise declines faster, which brings risks to the enterprise. Business leverage has the most comprehensive impact on business risk. In order to obtain business leverage, enterprises need to bear the resulting business risks, and need to strike a balance between business leverage benefits and risks.

Generally speaking, the higher the operating leverage factor, the stronger the impact on the operating leverage efficiency and the greater the operational risk. Vice versa.

Total leverage coefficient: refers to the product of the company's financial leverage coefficient and operating leverage coefficient, which is a measure of the company's profitability per share.

Financial leverage coefficient DFL = EBIT [ EBIT - I - D (1-R)] = EBIT [EBIT - Interest - Preferred Stock Dividend (1-Income Tax Rate)].

Operating leverage coefficient dol = (ebit+f) ebit = (EBIT + total fixed costs) EBIT.

Then the total leverage factor DTL = DFL * DOL = (EBIT+F) [ EBIT-I- D (1-R)].

EBIT + Total Fixed Costs) [EBIT - Interest - Preferred Stock Dividend (1 - Income Tax Rate)].

where EBIT = Sales S - Total Variable Costs VC - Total Fixed Costs F

Total leverage factor DTL = DFL * DOL = (EBIT+F) [ EBIT- I - D (1-R)]. The total leverage factor refers to the product of the company's financial leverage coefficient and operating leverage factor.

Where: EBIT – EBIT f – total fixed costs i – interest d – preferred share dividend r – income tax rate.

Note: EBIT = Sales S - Total Variable Costs VC - Total Fixed Costs F.

It is used to estimate the impact of changes in sales on earnings per share and to reveal the correlation between operating and financial leverage. The detailed explanation is as follows:

First of all, the company's management can make a judgment on the impact of earnings per share when the operating income changes under a certain cost structure and financing structure, that is, it can estimate the impact of the change in operating income on earnings per share. For example, if a company's total leverage factor is 3, it means that every 1x increase (decrease) in operating income will result in a 3x increase (decrease) in earnings per share.

Secondly, through the interrelationship between operating leverage and financial leverage, it is conducive to the management to manage operational risk and financial risk, that is, in order to control a certain total leverage factor, operating leverage and financial leverage can have many different combinations. For example, companies with higher operating leverage can use financial leverage to a lower extent; Companies with low operating leverage can use financial leverage to a higher extent, among other things. This is a choice that the company makes after considering the specific factors involved.

We hope you find the following information helpful:

The total leverage coefficient refers to the product of the company's financial leverage coefficient and the operating leverage coefficient, which directly examines the impact of changes in operating income on earnings per share, and is a measure of the company's profitability per share.

Calculation of the total leverage factor:

Since the financial leverage factor dfl=ebit [ebit- i - d (1-r)], where: ebit- earnings before interest and taxes i - interest d--preferred dividends r--income tax rate, operating leverage coefficient dol=(ebit+f) ebit, where: ebit--earnings before interest and taxes f--total fixed costs, so the total leverage coefficient dtl = dfl* dol = ebit+f) ebit- i - d (1-r)], where:

EBIT - EBIT F - Total Fixed Costs I - Interest D - Preferred Stock Dividends R - Income Tax Rate, Note: EBIT = Sales S - Total Variable Costs VC - Total Fixed Costs F

Easy to memorize formulas.

Sales Revenue - Variable Costs = Marginal Contribution (1) Marginal Contribution - Fixed Costs = EBIT.

2) Earnings before interest and taxes - Interest = Profit before taxes (total profit).

3) operating leverage dol = (1) 2);

Financial leverage DFL = 2) 3);

Total leverage DTL = 1) 3).

The total leverage factor plays the role of ( ) a) the impact of changes in estimated sales on EBIT b. the impact of changes in estimated sales on earnings per share.

c. Reveal the correlation between operating leverage and financial leverage d. Estimate the impact of changes in EBIT on earnings per share e. Estimate the impact of sales volume on EBIT.

The formula for calculating the three leverage factors = EBIT change rate and production and sales volume change rate = ( ebit ebit) (q q). Leverage adds the borrowed currency to the existing funds used for investment, leverage, the ratio of assets to bank capital.

The rational use of the principle of leverage is helpful for enterprises and individuals to accelerate their development and improve efficiency, but there is also a risk that they cannot be repaid when due. Leverage reflects the ratio of the cost of investing in the underlying stock relative to investing in warrants. Assuming a leverage ratio of 10x, this only means that the cost of investing in a warrant is one-tenth of that of investing in the underlying stock, and does not mean that when the underlying stock rises by 1%, the warrant will increase by 10%.

The total leverage factor refers to the product of the financial leverage coefficient and the operating leverage coefficient of the enterprise. This coefficient directly examines the impact of changes in operating income on earnings per share, and is a measure of a company's profitability per share.

The total leverage factor is calculated as DTL=DFL DOL=(EBIT+F) [EBIT-I-D (1-R)].

Among them: EBIT is EBIT; f is the total fixed cost; i is interest; d is a dividend on preferred shares; r is the income tax rate.

The significance of calculating the total leverage factor.

1. By calculating the total leverage factor, it is possible to estimate the impact of changes in sales volume on earnings per share. Total leverage is a combination of financial leverage and operating leverage, which affects EBIT by expanding sales, while financial leverage affects earnings per share by expanding EBIT. If both levers work together, a small change in sales can lead to a larger change in earnings per share.

2. Through total leverage, it can help companies understand the relationship between operating leverage and financial leverage, that is, in order to achieve a certain total leverage factor, operating leverage and financial leverage can have many different combinations. For example, a company with a high degree of operating leverage can use financial leverage to a lower degree; Companies with low operating leverage can use financial leverage to a higher degree, and so on.

Companies must balance the total risk and expected return according to their own objectives in order to reduce the total risk to an appropriate level.

Definition of financial leverage and operating leverage.

The financial leverage coefficient refers to the multiple of the change rate of profit after tax per share of common stock to the rate of change of earnings before interest and taxes, which is usually used to reflect the size and degree of financial leverage, as well as to evaluate the size of the financial risk of the enterprise.

The operating leverage factor is the ratio of the rate of change in EBIT to the rate of change in production and sales. It is usually used to reflect the degree of action of operating leverage, estimate the size of the benefit of operating leverage, and evaluate the level of operating risk.

What does a larger financial leverage mean?

1. The financial leverage coefficient index reflects the multiple of the change rate of after-tax profit equivalent to the change rate of EBIT before the change.

2. There is a close relationship between the size of the financial leverage coefficient and the size of the financial risk, the larger the financial leverage coefficient, the greater the financial risk, and vice versa.

3. Therefore, the financial leverage coefficient is not as large as possible, nor is it as small as possible, but mainly depends on the specific production and operation status of the enterprise, its financial risk tolerance and development potential.

What does a large operating leverage factor mean?

Generally speaking, the larger the operating leverage coefficient, the stronger the impact on the operating leverage benefits, and the greater the operating risk, as long as the fixed cost is not equal to zero, the operating leverage coefficient is everstable at 1; The change in production and sales volume is in the opposite direction to the change in the operating leverage factor; The change in the cost indicator is in the same direction as the change in the operating leverage factor.

a.Earnings per share change rate Net disturbance rate of production and sales volume.

b.The leverage coefficient of Zheng pants Hongying is wrong, and the financial leverage coefficient is wrong.

c.Operating Leverage Factor Financial Leverage Factor.

d.Earnings per share change rate wrong production and sales volume change rate.

Correct answer shout: ab