Suppose the Operating Agreement of an LLC Insists That All

question 30

Multiple Choice

Suppose the operating agreement of an LLC insists that all investors receive their pro rata share of all cash flows when a property is liquidated from the portfolio. If all 15 investors contributed an equal amount of equity in establishing the LLC, each investor should receive how much from the liquidation of a property valued at $3,500,000.

• A) $233,333
• B) $350,000
• C) $3,500,000
• D) $52,500,000

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Definitions:

Operating Cash Flow

The sum of money produced through a company's regular business activities.

EBIT

Earnings Before Interest and Taxes represents a company's profitability that accounts for all costs except for interest and taxes.

Cash Flows

The total amount of money being transferred into and out of a business, affecting its liquidity.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term financial health and operational efficiency.