financial statements9

financial statements9 - Cash flow and EVA i . Answer: e...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Cash flow and EVA Answer: e Diff: M R i . An analyst has acquired the following information regarding Company A and Company B: Company A has a higher net cash flow than Company B. Company B has higher net income than Company A. Company B has a higher operating cash flow than Company A. The companies have the same tax rate, investor-supplied operating capital, and cost of capital (WACC). Assume that non-cash revenues equal zero for both companies, and depreciation is the only non-cash expense for both companies. Which of the following statements is most correct? a. Company A has a higher depreciation expense than Company B. b. Company A has a lower level of operating income (EBIT) than Company B. c. Company A has a lower EVA than Company B. d. Statements a and b are correct. e. All of the statements above are correct. EVA and net income Answer: c Diff: M ii . Assume that the depreciation level used for tax and accounting purposes equals the true economic depreciation. Which of the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/04/2011 for the course COMM 101 taught by Professor Sy during the Spring '11 term at USC.

Page1 / 3

financial statements9 - Cash flow and EVA i . Answer: e...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online