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You look at Company ABC’s financial statements for 2019 and yousee operating income as $50,000....

You look at Company ABC’s financial statements for 2019 and you see operating income as $50,000. Depreciation for the year was $20,000. Interest was $5,000. Capital Expenditure was $10,000. Tax rate is 20%. What is levered cash flow?


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Expert Solution

Levered Cashflow is the cash flow that is available to both shareholders and debtholders.

Operating Income is the income that is available to both Bondholder and Equity Holder. Depreciation is a noncash expense, so it will not be deducted. and interest will also not be deducted as the Interest portion is what the debtholder receives.

EBITDA = 50,000

less, Capital Expenditure= 10,000

Total = 40,000

Less Tax(20%) = 8,000

Levered Cashflow= 32,000

Net Working Capital is Current asset - Current Liability. CA and CL information is not given.

jeff jeffy answered 2 years ago
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