The Operating Cash Flow of a Cost-Cutting Project

question 94

Multiple Choice

The operating cash flow of a cost-cutting project:

• A) is equal to the depreciation tax shield.
• B) is equal to zero because there is no incremental sales.
• C) can only be analyzed by projecting the sales and costs for a firm's entire operations.
• D) includes any changes that occur in the current accounts.
• E) can be positive even though there are no sales.

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Definitions:

Insurance Coverage

The protection provided by an insurance policy against financial loss or damage, specifying what types of loss are compensated.

Adhesion Contract

A contract drawn by one party that must be accepted on a take-it-or-leave-it basis.

Warranty

A promise, typically by a manufacturer or seller, regarding the condition or performance of a product.

Premium

An amount paid for an insurance policy or in broader terms, can represent a fee or price paid for higher quality or superior service.