Internally generated cash is calculated as:
I. Retained earnings
II. Interest payments
II. Depreciation
A) (I - II)
B) (I + II)
C) (I + III)
D) (I - III)

Question

Quizplus · Accepted Answer

Internally generated cash is the cash generated from within the company, without any external financing. Retained earnings represent the profits that the company has retained instead of distributing as dividends. Depreciation represents the decrease in the value of the company's assets over time. Interest payments represent the cost of borrowing money. Since interest payments represent an external financing source, they are not included in the calculation of internally generated cash. Therefore, the correct formula for internally generated cash is (I + III).

Internally Generated Cash Is Calculated As