# MOS and DOL — The Inverse Relationship
A quietly powerful identity that lets you skip whole stages of computation.
## The identity
> DOL = 1 ÷ MOS ratio, and equivalently MOS ratio = 1 ÷ DOL
Where MOS ratio = (Actual Sales − BEP Sales) ÷ Actual Sales.
## Why it works (intuition)
DOL = Contribution ÷ EBIT. At break-even, Contribution = Fixed Cost, so EBIT = 0. Above break-even, every extra rupee of contribution is pure EBIT. The further sales are above BEP (larger MOS), the larger EBIT is relative to Contribution — so DOL falls.
Mathematically: EBIT = Contribution × MOS ratio → Contribution / EBIT = 1 / MOS ratio.
## When to deploy it
- Question gives only BEP sales and actual sales → compute DOL in one step.
- Question gives only DOL → compute MOS ratio (often asked for as %).
- Question gives DOL and Sales, asks at what sales EBIT doubles → use MOS to back-solve a target.
## Diagnostic value
- DOL = 1 means MOS = 100% → no fixed cost (or sales infinitely above BEP).
- DOL = 10 means MOS = 10% → a 10% drop in sales wipes out EBIT.
- A high DOL is not automatically bad — it is bad only if a sales decline is plausible.