Which of the Following Statements Is CORRECT

question 118

Multiple Choice

Which of the following statements is CORRECT?

• A)Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations.
• B)After-tax operating income is calculated as EBIT(1 − T) + Depreciation.
• C)Two firms with identical sales and operating costs but with different amounts of debt and tax rates will have different operating incomes by definition.
• D)If a firm is reporting its income in accordance with generally accepted accounting principles, then its net income as reported on the income statement should be equal to its free cash flow.
• E)Retained earnings as reported on the balance sheet represent cash and, therefore, are available to distribute to stockholders as dividends or any other required cash payments to creditors and suppliers.

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Definitions:

Debit And Credit

A fundamental concept in accounting that describes the two sides of every financial transaction; debits increase assets or decrease liabilities, while credits decrease assets or increase liabilities.

Dr. And Cr.

Abbreviations for Debit (Dr.) and Credit (Cr.), fundamental concepts in accounting used to record business transactions in the ledger.

Increase And Decrease

Refers to the upward or downward movement in financial metrics, operational quantities, or statistical values.

Balance Of An Account

The amount of money currently in an account, reflecting all credits and debits made.