Levered Free Cash Flow is money available to which group?

Levered Free Cash Flow is money available to which group?

• A. All investors
• B. Debt holders
• C. Equity investors
• D. Both debt and equity after tax

Answer: (C)

Levered Free Cash Flow is the cash remaining after a company has paid all its debt obligations (interest and principal) and financing needs, meaning what’s left for equity holders. Debt holders have a fixed claim and are paid before equity, so they don’t receive this residual cash. This measure represents the amount available to equity investors after debt service, unlike measures before debt payments that go to all capital providers. In short, levered free cash flow is money available to equity investors.

Levered Free Cash Flow is the cash remaining after a company has paid all its debt obligations (interest and principal) and financing needs, meaning what’s left for equity holders. Debt holders have a fixed claim and are paid before equity, so they don’t receive this residual cash. This measure represents the amount available to equity investors after debt service, unlike measures before debt payments that go to all capital providers. In short, levered free cash flow is money available to equity investors.