<p>The <strong>Degree of Operating Leverage</strong> (DOL) is a financial metric that quantifies the extent to which a company uses fixed costs to generate its sales. It's a measure of risk, indicating how sensitive a company's operating income is to changes in its sales volume.</p>

<h2>How It Works</h2>
<p>DOL is calculated as:</p>
<table>
<tbody>
<tr>
<td>DOL = (Operating Income / Sales) * 100</td>
</tr>
</tbody>
</table>
<p>Here's how it works:</p>
<ul>
<li>Operating Income is the profit a company makes after covering its fixed and variable costs.</li>
<li>Sales represent the company's revenue from selling its products or services.</li>
</ul>
<p>The result is a percentage that shows how much of every dollar in sales goes towards operating income after covering fixed costs.</p>

<h2>Why It Matters for Traders</h2>
<p>Traders use DOL to:</p>
<ul>
<li>Assess a company's risk profile. A high DOL means the company is more sensitive to changes in sales, making it riskier.</li>
<li>Compare companies within the same industry. A higher DOL might indicate a company is more aggressive in its growth strategies.</li>
<li>Evaluate potential investments. A company with a DOL that's consistently higher than its peers might be overleveraged, increasing the risk of default.</li>
</ul>
<p>On STB Provider's MetaTrader 5 platform, traders can use DOL as an additional risk management tool when trading CFDs on stocks.</p>

<h2>Example</h2>
<p>Consider two companies, A and B, both with $100,000 in sales:</p>
<table>
<tbody>
<tr>
<th>Company</th>
<th>Operating Income</th>
<th>DOL</th>
</tr>
<tr>
<td>A</td>
<td>$20,000</td>
<td>20%</td>
</tr>
<tr>
<td>B</td>
<td>$40,000</td>
<td>40%</td>
</tr>
</tbody>
</table>
<p>Company B has a higher DOL, indicating it's more sensitive to changes in sales and thus, riskier.</p>

<h2>Key Takeaways</h2>
<ul>
<li>The <strong>Degree of Operating Leverage</strong> (DOL) is a risk metric that measures a company's sensitivity to changes in sales.</li>
<li>DOL is calculated as (Operating Income / Sales) * 100.</li>
<li>Traders use DOL to assess risk, compare companies, and evaluate potential investments.</li>
<li>On STB Provider's MetaTrader 5 platform, DOL can be used as a risk management tool when trading CFDs on stocks.</li>
</ul>