# Discerning the relationship (DOL/DFL/DTL)

If anyone could help, I’ll appreciate it. I noticed for DOL, DFL, and DTL, there are two discrete ways to perform each calculation.

For operating leverage, DOL= %change of EBIT/%change Units sold or DOL= Q(P-V)/Q(P-V)-F, which is basically the gross profit/EBIT.

For DFL, DFL= %change in Net income/%change EBIT or DFL= [Q(P-V)-F]/[Q(P-V)-F-INT], which is basically EBIT/EBT…and so on.

I’m having a problem discerning how the first formula relates to the second for each of the leverage calculation. For example, how can I relate DFL= %change in Net income/%change EBIT to DFL= [Q(P-V)-F]/[Q(P-V)-F-INT] and so on. Any insight?

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DOL={[ Q’ *(P-VC) - FC - (Q *(P - VC)- FC] / Q*(P - VC) - FC} / [(Q’ - Q)/Q]
= {[Q’ *(P-VC) - FC - Q *(P-VC)+FC] / (Q *(P - VC) - FC)} / [(Q’ - Q)/Q]
= {(Q’-Q) * (P-VC) / (Q *(P - VC) - FC)} / [(Q’ - Q) /Q]
DOL = Q *(P-VC) / (Q *(P-VC) -FC)