Which of the Following Statements Is CORRECT

question 60

Multiple Choice

Which of the following statements is CORRECT?

• A) Actions that increase reported net income will always increase cash flow.
• B) One way to increase EVA is to generate the same level of operating income but with less investor-supplied capital.
• C) One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free.
• D) One way to increase EVA is to achieve the same level of operating income but with more investor-supplied capital obtained at a higher cost of capital.
• E) If a firm reports positive net income, its EVA must also be positive.