Which of the Following Statements Is CORRECT

question 29

Multiple Choice

Which of the following statements is CORRECT?

• A) The current cash flow from existing assets is highly relevant to investors.However,since the value of the firm depends primarily upon its growth opportunities,accounting net income projections from those opportunities are the only relevant future flows with which investors are concerned.
• B) Two metrics that are used to measure a company's financial performance are net income and free cash flow.Accountants tend to emphasize net income as calculated in accordance with generally accepted accounting principles.Finance people generally put at least as much weight on free cash flows as they do on net income.
• C) To estimate the net cash provided by operations,depreciation must be subtracted from net income because depreciation is a non-cash charge that has been added to revenue.
• D) Interest paid by a corporation is a tax deduction for the paying corporation,but dividends paid are not deductible.This treatment,other things held constant,tends to discourage the use of debt financing by corporations.
• E) If Congress changed depreciation allowances so that companies had to report higher depreciation levels for tax purposes in 2018,companies would have lower free cash flows in 2018.

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Definitions:

Episodic Memory

An enduring memory type that encompasses the recall of specific instances, settings, and personal encounters.

Retroactive Interference

Situation in which material that was learned later disrupts the retrieval of information that was learned earlier.

Memory Retrieval

The act of retrieving or summoning back to awareness information stored in memory.

Prospective Memory

Remembering information about doing something in the future; includes memory for intentions.