The Extent to Which a Firm Adjusts Net Income for Changes

question 126

Multiple Choice

The extent to which a firm adjusts net income for changes in noncurrent assets and noncurrent liabilities in deriving cash flow from operations depends on the nature of its operations._____ will likely show a substantial addback to net income for depreciation expense, whereas _____will show a smaller amount.

• A)Service firms; firms that decrease in size
• B)Service firms; firms that increase in size
• C)Firms that decrease in size; firms that increase in size
• D)Service firms; capital-intensive firms
• E)Capital-intensive firms; service firms

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Definitions:

Variance

A statistical measure of the dispersion of data points in a data series around the mean.

Total Percentage Return

The total return on an investment, expressed as a percentage, that includes all dividends, interest, and capital gains.

Dividend

Money given to shareholders by a corporation, usually sourced from the firm's profits.

Dividend Yield

A measurement in finance that compares the dividends a company pays each year with its stock price.