Leverage

Leverage:

"Leverage represents the use of fixed cost items to magnify the firm's results." - Stanley B. Block and G. A. Hirt

"Leverage may be defined as meeting on fixed cost or paying a fixed return for employing resources as fund." - S. C. Kuchhhal

Read: Cost of Capital : Part - 02

"Leverage is created when a firm has fixed costs associated either with its sales and production operation or with its financing characteristics." - J. F. Weston, Scott, Besley and Eugene F. Brigham

"Leverage means the tendency to change profit at faster rate than sale." - G. A. Christy and F. E. Roden

Operating Leverage:

"Operating Leverage indicates the extend to which fixed assets i. e. plant and equipmetn are utilized by the firm." - S. B. Block & G. A. Hirt

"Operating Leverage may be defined as the ability to use the fixed operating cost to magnify the effects of changes in sales on earning before interest and taxes." - L. J. Gitman

Degree of Operating Leverage (DOL):

"When proportionate change in EBIT, as a result of change in sales, is more than the opportunity change in sales, operating leverage occurs." - M. Y. Khan and P. K. Jain

"Degree of Operating Leverage (DOL) may be defined as the percentage change in operating income that occurs as a result of a percentage in units sold." - S. B. Block & G. A. Hirt

Operating Break-Even Point Analysis:

"The break-even point is that point of sales volume at which total revenue is equal to total costs." - I. M. Pandey

"The firm's operating break-even point is the sales volume required for total revenues to equal total operating costs. At that point, EBIT equals zero." - Gitman L. J.

"The break-even point is the sales volume required for total revenues to equal total operating costs or for operating profit equal to zero." - Van Horne

Read: Important Abbreviations Related to Finance

Financial Leverage:

"Financial leverage is, the firm's ability to use fixed financial charges to magnify the effects of changes in EBIT on the firm's earnings per share." - L. J. Gitman

"The use of fixed charge sources of funds such as debt and preference capital along with the owner's equity in the capital structure is described as financial leverage or trading-on--equity." - I. M. Pandey

Degree of Financial Leverage:

"Degree of Financial Leverage me be defined as the percentage changes in earning per share, that takes as a results of percentage in earnings before interest and tax." - S. B. Block & G. A. Hirt

Total Leverage or Combined Leverage:

"The Degree of Operating and Financial Leverages can be combined to see the effect of total lleverage on EPS associated with a given change in sales." - I. M. Pandey

"Total Leverage can be defined as the firm's ability to use fixed cost, both operating and financial to magnify the effect of change in sale on the firm's earnings per share." - L. J. Gitman

N.B: To read more: Definitiion