Net Operating Income Is Similar to Which of the Following

question 4

Multiple Choice

Net operating income is similar to which of the following measures of cash flow in corporate finance?

• A) Dividend yield
• B) Earnings before deductions for interest, depreciation, income taxes, and amortization (EBIDTA)
• C) Price-earnings ratio
• D) Discount rate

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Definitions:

Mixed Cost

A cost consisting of both fixed and variable components, changing in total with the level of activity but remaining constant on a per unit basis only up to a certain level of activity.

Activity

A measure of actions or operations within a process, often used to allocate costs in activity-based costing.

Per Unit

A term referring to the cost, price, or quantity related to one unit of a product or service.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.