To calculate the enterprise valuation cash flow, one begins with which of the following items from the income statement?
A) net sales
B) operating profit
C) earnings before interest and taxes) × 1 - enterprise tax rate)
D) net income
E) net income times the enterprise tax rate

Question

Quizplus · Accepted Answer

Enterprise valuation cash flow typically starts with EBIT (Earnings Before Interest and Taxes) adjusted for taxes, which is EBIT × (1 - enterprise tax rate). This reflects the operating profit available to all capital providers.

To Calculate the Enterprise Valuation Cash Flow, One Begins with Which