Regardless of Type, All Levers Follow the Same Basic Principle

question 19

True/False

Regardless of type, all levers follow the same basic principle: effort farther than load from fulcrum = mechanical advantage; effort nearer than load to fulcrum = mechanical disadvantage.

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Definitions:

Free Cash Flow

Cash generated by a company's operations minus capital expenditures, indicating the amount of cash a company can distribute to shareholders or reinvest.

Net Debt

The total debt of a company minus its cash and cash equivalents, indicating the actual debt burden on the company.

Cost of Equity

The return that a company requires to decide if an investment meets capital return requirements and is often used in financial modeling for valuing a company.

Market Capitalization Rate

The expected rate of return on a portfolio consisting of all publicly traded securities, weighted by market capitalization.