Quiz Ch 03 – Identifying Correct Statements about Net Income and Economic Value Added (EVA)
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
Which statement is ACCURATE about net income and EVA?
Which statement is ACCURATE about net income and EVA?
Which statement is MOST accurate about taxation statement?
What could account for the increase in Michigan Energy’s cash balance despite experiencing negative cash flow last year?
In light of the Nantell Corporation’s recent purchase of an expensive equipment piece, where the initial plan was a 5-year straight-line depreciation, but Congress mandates a 7-year straight-line depreciation, what will be the consequence of this Congressional action assuming consistent depreciation methods for both tax and stockholder reporting?
Which outcome is MOST likely to occur in the year following Congress passing legislation that extends the depreciation period for equipment, aimed at boosting tax revenue assuming constant sales, operating costs, and tax rates, with the same depreciation method for both tax and stockholder reporting?
True or false: Growing accounts receivable boosts net cash from operating activities, as they generate cash upon collection.
True or false: Congress established the alternative minimum tax (AMT) to reduce the ability of affluent individuals to evade taxes via different deductions.
True or false: The first primary section in a typical cash flow statement is ‘Operating Activities,’ with ‘Net Income’ leading. Following in this section, certain items illustrating cash fluctuations are displayed, culminating in ‘Net Cash Provided by Operating Activities.’ While this figure can be positive or negative, a negative value is often indicative of imminent bankruptcy.
True or false: Net income and cash flow are two metrics for evaluating a company’s financial performance. Accountants stress net income per generally accepted accounting principles, while finance professionals often prioritize cash flows at least as much as net income.
True or false: The statement of cash flows comprises four primary sections, dedicated to operating, investing, and financing activities, along with a final section presenting a summary of cash and cash equivalents at the year’s conclusion.