All Other Things Being the Same, Which of the Following

question 11

Multiple Choice

All other things being the same, which of the following would increase the residual income?

• A)Decrease in average operating assets.
• B)Decrease in sales.
• C)Increase in minimum required return.
• D)Decrease in net operating income.

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Definitions:

Operating Activities

Business actions directly related to the production and delivery of goods and services, affecting cash flows from operations.

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.

Cash Flows

The overall volume of cash inflows and outflows within a corporation, impacting its availability of liquid funds.

Free Cash Flow

A financial metric that measures the amount of cash generated by a company after accounting for capital expenditures.