Users Sometimes Compute Net Income Plus Depreciation and Amortization (For

question 20

True/False

Users sometimes compute net income plus depreciation and amortization (for example EBITDA) as a crude proxy for operating cash flows.

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Definitions:

Revenues

The total amount of income generated by the sale of goods or services related to the company's primary operations.

Profits

Financial gains obtained when the revenue from business activities exceeds the expenses, taxes, and costs of operating.

Temporary Difference

A discrepancy between the carrying amount of an asset or liability in the balance sheet and its tax base, creating taxable or deductible amounts in the future.

Straight-Line Depreciation

A technique for distributing the cost of an asset uniformly over its lifespan.