Which of the Following Statements Is FALSE

question 67

Multiple Choice

Which of the following statements is FALSE?

• A) Because only the tax consequences of depreciation are relevant for free cash flow, we should use the depreciation expense that the firm will use for tax purposed in our free cash flow forecasts.
• B) A firm generally identifies its marginal tax rate by determining the tax bracket that it falls into based on its overall level of pre-tax income.
• C) Free Cash Flow = (Revenues - Costs) × (1 - τ_c) - Capital Expenditures - ΔNWC + τ_c × Depreciation.
• D) Net working capital is the difference between current liabilities and current assets.

---

Definitions:

Dollar Terms

The practice of expressing or measuring financial transactions, values, or performance in units of the U.S. dollar.

Markup

The amount added to the cost price of goods to cover overhead and profit.

Markdown

A reduction from the original or listed price of an item, often used as a strategy to increase sales or clear out inventory.

Timing

The selection of the most appropriate moment to execute an action in order to maximize its effectiveness or success.