Financial Management
Measures of Leverage
Operating, Financial, and Total Practical with Breakeven Analysis
3 CPD credits on completion
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Certificate on completion
Downloadable resources
Self-paced learning
About This Course
Course Information
Leverage focuses on a company’s fixed costs. The learning outcomes of this CPD course are: Appreciating the different risk types; Understanding the degree of operating leverage; Understanding the degree of financial leverage; Understanding the degree of total leverage; The breakeven volume of sales.
Certificate on Completion
This course is made up of videos, questions and additional reading materials, and accounts for 3 units of CPD . One unit is the equivalent of one hour of learning.
Course Sections
This course is made up of the following sections:
- Definitions and types (video)
- Definition and types (quiz)
- Effect of leverage on income (video)
- Effect of leverage on income (quiz)
What You Will Learn
- Define use and explain the relationship between fixed costs, risk, and earnings volatility
- Calculate the degree of operating use (DOL) and interpret what the result means for operating income sensitivity
- Calculate the degree of financial use (DFL) and explain how debt in the capital structure amplifies returns on equity
- Apply the degree of total use (DTL) to measure the combined effect of operating and financial use on net income
- Compare the return on equity under different capital structures, showing how use increases both upside and downside variability
- Calculate breakeven units and breakeven revenue, and determine the sales volume needed to achieve a target profit
Who This Course Is For
- Finance professionals who need to assess how cost structure and capital structure affect business risk
- Accountants analysing company performance who want to quantify the impact of fixed costs on earnings
- Professionals preparing for CFA or similar exams covering leverage and risk analysis
Prerequisites
- A basic understanding of income statements, including the distinction between fixed and variable costs
- Familiarity with return on equity and basic capital structure concepts is helpful
Frequently Asked Questions
Course Details
CPD Credits3
CertificateYes
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Everything included in your subscription:
CPD certificate on completion
Downloadable resources
Self-paced learning
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