Which One of the Following Is the Most Common Definition

question 105

Multiple Choice

Which one of the following is the most common definition of cash flow as used in the price-cash flow ratio?

• A)net income minus dividends
• B)net income plus depreciation
• C)net income minus depreciation plus taxes
• D)earnings before interest and taxes plus depreciation
• E)earnings before interest and taxes

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Definitions:

Income Ratio

A financial metric comparing earnings to another element, such as sales or assets, to assess profitability or performance.

Partnership Agreement

A legal document that specifies the terms and conditions under which a partnership operates, including profit sharing and decision-making processes.

Capital Accounts

Accounts used to record the financial contributions, withdrawals, and the share of profit or loss of owners in a partnership or in their personal accounts.

Unlimited Life

A concept in accounting that assumes a company will continue to operate indefinitely, allowing for the deferral of certain expenses over a long period.