Economic Value Added Uses "Adjusted After-Tax Operating Income" as One

question 13

Multiple Choice

Economic value added uses "adjusted after-tax operating income" as one of its inputs. One purpose of using after-tax income, rather than operating income, is to:

• A)Encourage managers to file tax reports
• B)Encourage managers to minimize taxes
• C)Improve information reported to the SEC
• D)Remove bias from the EVA calculation

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Definitions:

Semiannual

Occurring twice a year; a term often used in the context of interest payments, dividends, or certain financial reporting periods.

Interest Expense

The cost incurred by an entity for borrowed funds, frequently appearing as a line item on the income statement.

Market Rate

The prevailing interest rate available in the marketplace for securities or loans, varying with the demand, supply, and risk.

Semiannual Interest Payment

Interest payments made twice a year on a loan or bond.