In calculation of net cash flow, depreciation and amortization are treated as________?
Correct answer: D. Non-cash charges
- A. Current liabilities
- B. Income expenses
- C. Non-cash revenues
- D. Non-cash charges
Explanation
Depreciation and amortization reduce reported profit but do not involve a current cash payment. They are therefore added back as non-cash charges when calculating cash flow.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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