Quiz – T/F: EBITDA stands for …
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition and 10th Edition
EBITDA stands for earnings before interest, taxes, debt, and assets.
EBITDA stands for earnings before interest, taxes, debt, and assets.
The free cash flow (FCF) of a business is the cash flow available for interest and dividend payments once the firm has made investments in current and fixed assets that are needed to sustain operations.
The following statement is either true or false: Free cash flow is the cast that if withdrawn would harm the firm’s ability to operate and earn future cash flows. Experts Have Solved This Problem Please login or register to access this content.
Determine if the following statement is true or false: In finance, we focus on cash flows rather than on accounting profits. Free cash flow (FCF) is calculated as after-tax operating income plus depreciation expense minus the sum of capital expenditures and changes in net operating working capital. Experts Have Solved This Problem Please login or…
Determine if the following statement is true: Interest paid by a corporation is a tax deduction for the paying corporation. On the other hand, dividends paid are not tax deductible. This tax advantage to debt financing tends to encourage the use of debt by corporations. Experts Have Solved This Problem Please login or register to…
If a firm is adhering to generally accepted accounting principles, then its net income as shown in the income statement should equal its free cash flow.
Determine Net operating capital is defined as current assets minus the difference between current liabilities and notes payable. This, of course, assumes that the company does not have excess cash. Experts Have Solved This Problem Please login or register to access this content.
Determine if the following is true or false: Retained earnings as shown on the balance sheet don’t represent cash. Instead, it represents part of the stockholders’ claim against the firm’s existing assets. Retained earnings are essentially stockholders’ reinvested earnings. Experts Have Solved This Problem Please login or register to access this content.
The amount shown on the balance sheet as “retained earnings” is equal to the company’s net income for the year minus any dividends paid.
Retained earnings is the actual cash that the company has earned earned through operations less the cash that has been paid out to stockholders as dividends. If the firm has enough retained earnings, it can buy assets and pay form them with cash from retained earnings.