How Is Shareholder Value from Operations Calculated

question 11

Multiple Choice

How is shareholder value from operations calculated?

• A) By subtracting debt from present value of free cash flows from operations
• B) By adding debt and the discounted value of taxable cash flows from operations
• C) By adding debt and the present value of free cash flows from operations
• D) By subtracting debt from discounted value of taxable cash flows from operations

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Definitions:

Indirect Method

A financial reporting approach to prepare the cash flow statement where non-cash activities are adjusted to the net income to calculate cash flow from operating activities.

Statement of Cash Flows

A financial statement that details the inflows and outflows of cash within a company during a specific period.

Cash Receipts

The collection of money (cash, checks, electronic transfers) by a business from its customers, either for goods sold or services provided.

Cash Flows

Cash flows refer to the net amount of cash and cash-equivalents being transferred into and out of a business.