Suppose a firm's profits increase 116 percent after sales change from $3.25 million to $4.7 million. What is the firm's degree of operating leverage (DOL)? Round your answer to two decimal places.
The degree of operating leverage is defined as the ratio of the percentage increase in profit divided by percentage increase in sales.
So, the answer should be 116%/((4.7/3.25)-1)=2.6(Ans)
Suppose a firm's profits increase 116 percent after sales change from $3.25 million to $4.7 million....