Which of the Following Statements Regarding Calculating Cash Flow from Operations

question 115

Multiple Choice

Which of the following statements regarding calculating cash flow from operations is incorrect?

• A) Cash flow from operations = revenues - cash expenses - taxes paid
• B) Cash flow from operations = net profit + depreciation
• C) Depreciation tax shield = depreciation * (1 -tax rate)
• D) Cash flow from operations = (revenues - cash expenses) * (1 - tax rate) + (depreciation * tax rate)

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Definitions:

APR

Annual Percentage Rate; a measure that reflects the cost of borrowing money or the return on an investment, including interest and other associated fees, shown as a yearly rate.

Finance Charge

A fee representing the cost of credit or the cost of borrowing money, including interest and other related charges.

Car Loan

A financial agreement in which a lender provides funds to a borrower for the purpose of purchasing a vehicle, to be repaid with interest over a set period.

FICO Score

A score that summarizes the probability that a debtor will pay a debt and is a reliable way that creditors judge credit worthiness.