The degree of pretax cash flow operating leverage provides us with
A) a measure of how sensitive pretax operating cash flows are to changes in revenue.
B) a measure of how sensitive accounting operating profits are to changes in revenue.
C) a measure of how sensitive NOPAT is to changes in revenue.
D) none of the above.

Question

Quizplus · Accepted Answer

The degree of pretax cash flow operating leverage measures the sensitivity of pretax operating cash flows to changes in revenue, indicating how much a company's cash flow will increase or decrease given a change in revenue. Therefore, the correct answer is A.

The Degree of Pretax Cash Flow Operating Leverage Provides Us