For a firm with long-term debt, net income is equal to:
A) Pretax income - Interest expense - Taxes.
B) Dividends + Addition to retained earnings.
C) EBIT - Taxes.
D) Taxes + Addition to retained earnings.
E) Pretax income * (1 - Marginal tax rate).

Question

Quizplus · Accepted Answer

Net income is the sum of dividends and the addition to retained earnings, as it represents the total earnings available to shareholders after all expenses and taxes have been deducted.

For a Firm with Long-Term Debt, Net Income Is Equal