Austin Financial Recently Announced That Its Net Income Increased Sharply

question 123

Multiple Choice

Austin Financial recently announced that its net income increased sharply from the previous year,yet its net cash provided from operations declined.Which of the following could explain this performance?

• A) The company's dividend payment to common stockholders declined.
• B) The company's expenditures on fixed assets declined.
• C) The company's cost of goods sold increased.
• D) The company's depreciation expense declined.
• E) The company's interest expense increased.

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Definitions:

Consumer Sovereignty

The theory that consumer preferences and choices dictate the production and sale of goods and services in a market.

Laissez-Faire Economy

An economic system where transactions between private parties are free from government intervention such as regulations, privileges, tariffs, and subsidies.

Command Economy

An economic system where the government makes all decisions on the production and consumption of goods and services.

Free Enterprise

An economic system based on private ownership and the freedom of individuals to start and manage their own businesses.