Which of the following identities is TRUE?
A)Operating Cash Flow = EBIT - Depreciation + Taxes
B)Net Capital Spending = Ending Net Fixed Assets - Depreciation
C)Net Working Capital (NWC)= Current Assets - Current Liabilities
D)Cash Flow from Assets = Operating Cash Flow - Net Capital Spending

Question

Quizplus · Accepted Answer

This identity is correct as it is the formula for calculating net working capital, which is the difference between current assets and current liabilities. A is incorrect as it is missing the adjustment for changes in working capital. B is only a formula for calculating net capital spending, not a true identity. D is missing the adjustment for changes in working capital.

Which of the Following Identities Is TRUE