A Firm's Operating Cash Flow (OCF) Is Defined as ________

question 46

Multiple Choice

A firm's operating cash flow (OCF) is defined as ________.

• A) gross profit minus operating expenses
• B) gross profit minus depreciation
• C) EBIT times one minus the tax rate plus depreciation
• D) EBIT plus depreciation

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Definitions:

Resell

The act of selling something that one has purchased to another buyer, often for a price higher than the original purchase price.

Equipment Cost

Equipment cost refers to the purchase price and associated expenses of acquiring equipment for business operations, including delivery and installation fees.

Depreciation Tax Shield

The reduction in taxable income that results from the allowance for depreciation expenses, lowering tax liability.

CCA Rate

Capital Cost Allowance rate, used for tax purposes to determine the yearly depreciation of tangible property.