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:

Zygote

The initial cell formed when a sperm cell unites with an egg cell, which then undergoes cell division to develop into an embryo.

Uterine Wall

The muscular layer of the uterus, which expands during pregnancy to accommodate a growing fetus and contracts during childbirth.

Prenatal Development

The process of growth and development within the womb from conception to birth.

Fluid Intelligence

The capacity for deductive reasoning and the ability to use new information to solve problems; it is relatively independent of education and tends to decline in old age.