Asked by Christopher Severson on Jul 20, 2024
Verified
Sales minus all cash expenses except interest, but including taxes, calculates the _____ of a project.
A) Pre-tax operating cash flows.
B) After-tax operating cash flows.
C) Pre-tax net income.
D) After-tax net income.
E) After-tax annual total cash flows.
Operating Cash Flows
The cash generated from a company’s normal business operations, indicating its capability to generate sufficient revenue to maintain and grow operations.
Pre-tax Net Income
The amount of income earned by a company before taxes are deducted, representing its profitability.
- Attain an understanding of the fundamental importance of cash flows in assessing financial situations and making choices regarding capital investments.
Verified Answer
BP
Benjamin PullenJul 27, 2024
Final Answer :
B
Explanation :
After-tax operating cash flows are calculated by subtracting all cash expenses, including taxes but excluding interest, from sales. This measure reflects the cash generated from operations after accounting for taxes, providing a clear view of the project's profitability from its core operations.
Learning Objectives
- Attain an understanding of the fundamental importance of cash flows in assessing financial situations and making choices regarding capital investments.