Which of the Following Statements Is CORRECT

question 66

Multiple Choice

Which of the following statements is CORRECT?

• A)The current cash flow from existing assets is highly relevant to investors. However, since the value of the firm depends primarily upon its growth opportunities, accounting net income projections from those opportunities are the only relevant future flows with which investors are concerned.
• B)Two metrics that are used to measure a company's financial performance are net income and free cash flow. Accountants tend to emphasize net income as calculated in accordance with generally accepted accounting principles. Finance people generally put at least as much weight on free cash flows as they do on net income.
• C)To estimate the net cash provided by operations, depreciation must be subtracted from net income because it is a non-cash charge that has been added to revenue.
• D)Interest paid by a corporation is a tax deduction for the paying corporation, but dividends paid are not deductible. This treatment, other things held constant, tends to discourage the use of debt financing by corporations.
• E)If Congress changed depreciation allowances so that companies had to report higher depreciation levels for tax purposes in 2014, this would lower their free cash flows for 2014.

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Definitions:

Positive Punishment

A method of behavior modification that involves the addition of an aversive stimulus in order to decrease a certain behavior.

Negative Punishment

A behavior modification technique where something desirable is removed following an undesired behavior, with the intention of decreasing that behavior.

Non-Adherent Health Behaviors

Actions or inactions by an individual that do not follow the health advice or treatment plans recommended by healthcare professionals.

Health Belief Model

A theoretical model explaining individuals' behaviors towards health services based on perceived threats and benefits.