Which statement is correct?
A)Net income equals the cash generated by the company's operations.
B)Net income seldom reflects the change in cash during the period.
C)Net income is the most important metric to measure the financial performance of a company.
D)Cash flow is the most important metric to measure the financial performance of a company.

Question

Quizplus · Accepted Answer

Net income does not directly equate to the cash generated by a company's operations because it includes non-cash expenses such as depreciation and amortization. It also does not account for changes in working capital that affect cash flow. Therefore, net income can often differ significantly from the actual cash flow during a period.

Which Statement Is Correct