Calculation formula of three lever coefficient

The calculation formula of three leverage coefficients = earnings before interest and tax change rate/production and sales change rate =(△EBIT/EBIT)/(△Q/Q). Leverage will add borrowed money to existing funds for investment; Leverage ratio, the ratio of assets to bank capital.

Rational use of leverage principle is helpful for enterprises and individuals to accelerate their development and improve their efficiency, but there is also the risk that they will not be able to repay when due. Leverage is debt, and leverage ratio is debt ratio. Leverage reflects the cost ratio of investment stocks to investment warrants. Assuming that the leverage ratio is 10 times, it can only show that the cost of investment warrants is one tenth of that of investment stocks, but it cannot show that when stocks rise 1%, the warrant price will rise 10%.