Answer:
This question is incomplete as there are no choices to select the correct one. However, I will explain what would cause a decrease in both assets and equity below;
Explanation:
To answer this question, you will identify a transaction that affects both the asset side and equity side of a balance sheet. In this case, we consider a decrease in both. Example is ; repurchase of shares using cash. This occurs when a company buys back their shares from shareholders. This will decrease cash(which is a current asset) since shareholders will be paid and they will give back their shares. After the repurchase, there will be a decrease in the number of outstanding shares hence decreasing the total book value of equity.
The answer is trying-to-consume model.
The trying-to-consume model is intended to account for situations in which the action or outcome is wanted but not known, and it depicts the consumer's attempts to consume, whether successful or not.
What is trying-to-consume model?
- Trying to consume, in general, focuses on a goal that a consumer seeks but may fail to pursue or attain due to various assumptions of abilities to reach the objective.
- It comprises of a person's knowledge or impression of a few items or services based on personal experience or relevant information obtained from numerous sources. This information generally leads to consumer perceptions and particular action.
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Answer:
Option D. $6.25 Million
Explanation:
The Free Cash Flow can be calculated using the following formula (Ignoring investment):
Free Cash Flow = (Revenue - Operating Expenses) Minus Tax
Here
Revenue is $20 Million
Operating Expenses are $12 Million
And
Tax is not given however tax rate is given which is 35% here. For tax purposes, we will assume that the depreciation is tax allowable expense, so
Tax = (Revenue - Operating Expenses - Depreciation) * Tax rate
By putting values we have:
Tax = ($20m - $12m - $3m) = $1.75 Million
The cash impact is taken while calculating the Free cash flow. This free cash flow method is also used in IRR, NPV, discounted payback method, etc.
By putting values in the above bold equation, we have:
Free Cash Flow = ($20m - $12m) - $1.75 = $6.25 Million
