medium · Principles of Finance
How does the 'Cash Sweep' in an LBO typically treat capital expenditures?
- CapEx is ignored because it is an investing activity and not an operating one
- CapEx is subtracted from operating cash flow before determining the cash available for debt repayment
- CapEx is added back to Net Income as a non-cash source of funds
- CapEx is funded by issuing new equity to preserve cash for debt
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