Generally, which of the following non-cash charges is/are added to earnings after tax to calculate the after-tax cash flow?
A)Only statement I is correct
B)Only statement II is correct
C)Both statements I and II are correct
D)Neither statement I nor II is correct

Question

Quizplus · Accepted Answer

Non-cash charges such as depreciation and amortization are added back to earnings after tax to calculate the after-tax cash flow. This is because they are expenses that do not involve an actual outflow of cash. Therefore, statement I is correct. Additionally, interest expense is a cash expense and is subtracted from earnings before tax to calculate the taxable income. Therefore, statement II is also correct.

Generally, Which of the Following Non-Cash Charges Is/are Added to Earnings