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:

External Financing

External financing involves acquiring capital from outside sources to fund business operations and investments, such as through loans, issuing equity, or other forms of financial support from outside the company.

Total Production Costs

The combined costs of materials, labor, and overhead incurred in producing goods.