The Top-Down Approach to Computing the Operating Cash Flow

question 42

Multiple Choice

The top-down approach to computing the operating cash flow:

• A) ignores all noncash items.
• B) applies only if a project produces sales.
• C) can only be used if the entire cash flows of a firm are included.
• D) is equal to sales - costs - taxes + depreciation.
• E) includes the interest expense related to a project.

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Definitions:

Government Sets Prices

A policy or situation in which the government directly controls or sets the prices of goods and services in an economy, rather than allowing them to be determined through free-market forces.

Market Reform

a strategic change in economic policies and regulations intended to create a more competitive and efficient market environment.

Market-Oriented Economy

An economic system where supply and demand determine the production of goods and services, with minimal government intervention.

Soviet Union

A former federal socialist state in Eastern Europe and Asia, existing from 1922 until its dissolution in 1991, known for its centralized economy and government.