WHAT is the range of DOL?

CA Intermediate · Financial Management and Strategic Management · MTP · September 2024
WHAT is the range of DOL?

Suggested Answer and Working Notes:

DOL can never be between zero and one. It can be zero or less or it can be one or more. When Sales is much higher than BEP sales, DOL will be slightly more than one. With decrease in sales, DOL will increase. At BEP, DOL will be infinite. When sales is slightly less than BEP, DOL will be negative infinite. With further reduction in sale, DOL will move towards zero. At zero sales, DOL will also be zero.

Topics: Part-A: Financial Management

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