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CFA Level 1
Corporate Finance

Total Leverage Calculation in Corporate Finance

Very Hard Measures Of Leverage Total Leverage

XYZ Corporation is analyzing its financial performance and is particularly interested in understanding its total leverage. The company has the following financials:

- Earnings Before Interest and Taxes (EBIT): $500,000

- Interest Expense: $100,000

- Number of Units Sold: 10,000

- Price per Unit: $75

- Variable Cost per Unit: $45

- Fixed Costs: $250,000

Using this data, what is the degree of total leverage (DTL) at the current sales level?

Hint

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