The Degree of Total Leverage represents the sensitivity of net income to changes in the number of units produced and sold. It combines the effects of operating and financial leverage and estimates what will be the impact of an increase/decrease of units sold on the net income.
Some other related topics you might be interested to explore are Degree of Financial Leverage, Degree of Operating Leverage, and Contribution margin.
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Degree of Total Leverage is among the topics included in the Corporate Finance module of the CFA Level 1 Curriculum.
