Question

Which of the following statements is FALSE?A. The market value of any asset is what an item is actually worth if sold and must always be apositive value.B. The marginal tax rate is the tax rate payable on the next dollar earned and, due to deductionsand credits, the marginal tax rate is always higher than the average tax rate.C. Liquidity measures the speed and ease with which assets can be converted to cash withoutsignificant loss of value.D. Operating Investment is generated from utilizing existing assets after deducting interestexpense.

Answer 1

Answer:

The false statement is letter "D": Operating Investment is generated from utilizing existing assets after deducting interest expense.

Explanation:

Operating investments are daily processes conducted by a company to generate income. They pertain to the core business activities such as sales and manufacturing and they provide most of the cash flow that determines whether a business is profitable. Those investments focus on improving the operational performance to create profit in the form of increased value.

In option "D", operating investment is related to deducting interest expenses but actually that process does not belong to it, making the statement false.