When calculating a company’s free cash flow from earnings before interest and taxes we must add back depreciation, amortization and depletion expense and allowances because * The accounting method for reporting such expenses may be different from that reported to the taxing authority. They approximate the value of fixed asset purchases during the year. They are unrelated to the amount of taxes paid during the year. They are non-cash expenditures.

When calculating a company’s free cash flow from earnings before interest and taxes we must add back depreciation, amortization and depletion expense and allowances because * The accounting method for reporting such expenses may be different from that reported to the taxing authority. They approximate the value of fixed asset purchases during the year. They are unrelated to the amount of taxes paid during the year. They are non-cash expenditures.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter14: Data Mining

Section14.2: Classification Methods

Problem 7P

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