Which of the following statements regarding calculating cash flow from operations is incorrect?
A) Cash flow from operations = revenues - cash expenses - taxes paid
B) Cash flow from operations = net profit + depreciation
C) Depreciation tax shield = depreciation * (1 -tax rate)
D) Cash flow from operations = (revenues - cash expenses) * (1 - tax rate) + (depreciation * tax rate)

Question

Quizplus · Accepted Answer

The depreciation tax shield is calculated as depreciation * tax rate, not depreciation * (1 - tax rate).

Which of the Following Statements Regarding Calculating Cash Flow from Operations