Which of the following statements is CORRECT?
A. A shortcut to calculate free cash flow (FCF) is defined as follows:
FCF = Net income + Depreciation and Amortization.
B. Changes in working capital have no effect on free cash flow.
C. Free cash flow (FCF) is defined as follows:FCF = EBIT(1 ? T) + Depreciation and Amortization ? Capital expenditures required to sustain operations ? Required changes in net operating working capital.
D. Free cash flow (FCF) is defined as follows:FCF = EBIT(1 ? T)+ Depreciation and Amortization + Capital expenditures.
E. Net cash provided (used) by operations is the same as free cash flow (FCF).
Answer: C
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The capitalization of interest in the acquisition cost of assets during construction
a. reduces otherwise reportable interest expense. b. increases net income during periods of construction. c. results in higher depreciation charges, reducing net income. d. delays expense recognition from the times of borrowing to the times of using the asset. e. all of the above
Which of the following expenses would be considered an indirect expense for departmental accounting purposes?
a. Rent allocated to each individual department. b. Cost of goods sold for each individual department. c. Cost of advertising a sale in an individual department. d. Freight-in on the purchase of merchandise for each individual department. e. Depreciation on the fixtures of each department.
Here's the sensitivity report for the decision variables. Which of these conclusions is correct?
Final Reduced Objective Allowable Allowable Cell Name Value Cost Coefficient Increase Decrease $B$2 Bar 12 0 1500 1560 1E+30 $C$2 Cuisine 12 0 5000 1660 1E+30 $D$2 Excursion 24.24 0 17000 1E+30 3458.333333 A) If the cost of the Bar variable is reduced by more than 0, then more of it will be used. B) If the cost of the Bar variable is increased by more than 0, then more of it will be used. C) If the coefficient for the Cuisine variable rises to 1660, then more of it will be used. D) It doesn't matter how much money they make on excursions, the optimal answer will continue to be 24.24 of them.
________ is a noncash charge.
A) Labor expense B) Depreciation C) Salaries D) Rent