The Degree of Operating Leverage represents the sensitivity of operating income to changes in product demand at a given level of unit sales. It estimates what the percentage change in operating income will be if the quantity of products sold rises or falls by a certain percentage.
Some other related topics you might be interested to explore are Degree of Financial Leverage, Degree of Total Leverage, and Contribution margin.
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Degree of Operating Leverage is among the topics included in the Corporate Finance module of the CFA Level 1 Curriculum.
