Calculating Degree of Financial Leverage (DFL)

ABC Corporation is currently evaluating its financial leverage. The firm has $10 million in equity, $5 million in debt, and a net income of $1 million. The CFO has heard about the benefits and risks associated with financial leverage and wants to understand how it impacts the firm's Return on Equity (ROE).

Given this information, what is ABC Corporation's degree of financial leverage (DFL) at this level of operating income? Financial leverage is generally calculated using the formula: DFL = % Change in Earnings Per Share (EPS) / % Change in Earnings Before Interest and Taxes (EBIT).