In determining a property's before-tax cash flow from operations (BTCF) and net operating income (NOI), it is important to understand how each accounts for the use of financial leverage in its calculation. Which of the following statements is true in regards to how these two measures account for the use of financial leverage?

Question

Quizplus · Accepted Answer

BTCF (Before-Tax Cash Flow) is a levered cash flow because it takes into account the property's debt service, whereas NOI (Net Operating Income) is an unlevered cash flow as it does not consider debt service, focusing solely on the property's operational income and expenses.

In Determining a Property's Before-Tax Cash Flow from Operations (BTCF)