basic

Degree of Financial Leverage (DFL) Calculator

DFL = % ΔEPS / % ΔEBIT = EBIT / (EBIT − Interest).

Compute the degree of financial leverage — sensitivity of earnings per share (EPS) to a change in EBIT — directly from EBIT and interest expense: DFL = EBIT / (EBIT − Interest). A DFL of 1.5 means a 1 % change in EBIT produces a 1.5 % change in EPS. Higher debt → higher DFL → magnified returns and risk for equity-holders.

Nadia Almasri By Nadia Almasri
Published Last reviewed 1 min read

Inputs

$
$

Results

Enter values and click Calculate to see results.
Was this helpful?

How to use this calculator

  1. Fill in the inputs above using the units you already have.
  2. Values update automatically as you type — no submit button needed.
  3. Hover any result row for the underlying formula and intermediate values.

Formula

DFL = EBIT / (EBIT − Interest).

In depth

Compute the degree of financial leverage — sensitivity of earnings per share (EPS) to a change in EBIT — directly from EBIT and interest expense: DFL = EBIT / (EBIT − Interest). A DFL of 1.5 means a 1 % change in EBIT produces a 1.5 % change in EPS. Higher debt → higher DFL → magnified returns and risk for equity-holders.