The bottom-up approach to computing the operating cash flow applies only when:
A)both the depreciation expense and the interest expense are equal to zero.
B)the interest expense is equal to zero.
C)the project is a cost-cutting project.
D)no fixed assets are required for the project.
E)taxes are ignored and the interest expense is equal to zero.

Question

Quizplus · Accepted Answer

The bottom-up approach to computing the operating cash flow is calculated by subtracting all operating expenses (including depreciation but excluding interest) from operating revenues. Therefore, this approach can only be used when interest expenses are equal to zero.

The Bottom-Up Approach to Computing the Operating Cash Flow Applies