In determining cash flow, managers often look at a company's
A) net profit figure shown on the firm's operating statement.
B) earnings before subtracting out noncash expenses.
C) earnings after subtracting noncash expenses.
D) revenue after subtracting depreciation of facilities.
E) historical net profit numbers.

Question

Quizplus · Accepted Answer

Earnings before subtracting out noncash expenses are considered in determining cash flow because this approach adds back noncash expenses like depreciation to net income, providing a clearer picture of the actual cash generated by the company's operations.

In Determining Cash Flow, Managers Often Look at a Company's