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 tax rates.
D) a measure of how sensitive accounting operating profits are to changes in tax rates.

Question

Quizplus · Accepted Answer

The degree of pretax cash flow operating leverage measures the sensitivity of pretax operating cash flows to changes in revenue. It indicates how much pretax cash flows will change with a given change in revenue.

The Degree of Pretax Cash Flow Operating Leverage Provides Us