After-tax operating income is calculated as EBIT

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Reference no: EM13828966

Which of the following statements is CORRECT?

a. Retained earnings as reported on the balance sheet represent cash and, therefore, are available to distribute to stockholders as dividends or any other required cash payments to creditors and suppliers.

b. After-tax operating income is calculated as EBIT(1 - T) + Depreciation.

c. Two firms with identical sales and operating costs but with different amounts of debt and tax rates will have different operating incomes by definition.

d. Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations.

e. If a firm is reporting its income in accordance with generally accepted accounting principles, then its net income as reported on the income statement should be equal to its free cash flow.

Reference no: EM13828966

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