Which of the Following Statements Is Most Correct

question 27

Multiple Choice

Which of the following statements is most correct?

• A) Actions which increase net income will always increase net cash flow.
• B) One way to increase EVA is to maintain the same operating income with less capital.
• C) One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free.
• D) Answers a and b are correct.
• E) Answers a and c are correct.

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Definitions:

Perennial

Describes plants that live for more than two years or streams that flow continuously throughout the year.

Gradient

A rate of inclination or slope, or the rate at which a physical quantity changes with respect to change in another quantity.

Cross-sectional Area

The area of a particular section of an object or material that is exposed when it is cut through by a plane.

Deposition

The geological process by which sediments, soil, and rocks are added to a landform or landmass, often carried by wind, water, or ice.