Sorry for the amateurish question, but what’s typically considered “normal” for operating, financial, and total leverage?
This is going to depend largely on the industry and sector you are looking at, among other things.
Depends on the type of business.
Heavy industrial services – high fixed costs
Here are the numbers, but I’m not sure what they mean DOL 1.20 DFL 1.05 DTL 1.26 Another question: what does it mean when these are volatile year after year? Say year 1 it had DTL of 1.8, then 0.9 for year two, then 1.26 the third year?
DFL = %change in net income / %change in operating income DOL = %change in operating income / %change in sales DTL = DFL*DOL = %change in net income / %change in sales You would expect that there would be variations from year-to-year which should average out over the long-term.