Internally generated cash is calculated as
A)retained earnings minus interest payments.
B)retained earnings plus interest payments.
C)retained earnings plus depreciation.
D)retained earnings minus depreciation.

Question

Quizplus · Accepted Answer

Internally generated cash is calculated as retained earnings plus depreciation. This is because depreciation is a non-cash expense that reduces net income (and thus retained earnings) for accounting purposes, but it does not reduce the actual cash flow of the company. Adding it back to retained earnings gives a more accurate picture of the cash generated by the company's operations.

Internally Generated Cash Is Calculated as