Which of the following adjustments to after-tax operating income is used to approximate cash income for EVA?
A) expensing research and development costs
B) using LIFO inventory method
C) deducting after tax interest expense
D) using taxes paid rather than tax expense

Question

Quizplus · Accepted Answer

Using taxes paid rather than tax expense is the correct adjustment to after-tax operating income to approximate cash income for Economic Value Added (EVA). This adjustment ensures that the calculation reflects actual cash outflows for taxes rather than the accounting figure for tax expense, which may include deferred taxes and thus not accurately represent the cash impact on the company's value.

Which of the Following Adjustments to After-Tax Operating Income Is