Based on your understanding of the differences between levered and unlevered cash flows, which of the following is an example of a levered cash flow?
A) Net operating income
B) Net Sale Proceeds
C) Sale price
D) Before-tax cash flow

Question

Quizplus · Accepted Answer

Before-tax cash flow is an example of levered cash flow as it takes into account the impact of debt financing on cash flows. Levered cash flows refer to the cash flows generated by a company after accounting for the interest and principal payments on its debt. Net operating income (A) refers to the income generated from a company's core business operations and does not take into account interest and principal payments. Net sale proceeds (B) and sale price (C) relate to the sale of assets and do not take into account any debt financing.

Based on Your Understanding of the Differences Between Levered and Unlevered