Interest and Dividends Paid by a Corporation Are Considered to Be

question 32

True/False

Interest and dividends paid by a corporation are considered to be deductible operating expenses, hence they decrease the firm's tax liability.

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Definitions:

Operating Cash Flow

The cash generated from a company's normal business operations before financing and investment activities.

Net Capital Spending

The total expenditure on fixed assets less any sales of fixed assets during a given period, often used in assessing a company's investment in physical assets.

Earnings Before Interest And Taxes

A financial performance measure that calculates a company's profitability by excluding interest and taxes expenses.

Marginal Tax Rate

The rate of additional federal income tax to be paid on an additional dollar of income, which varies depending on income levels and filing status.