Answer: Depreciation is tax deductible
Explanation:
Depreciation on assets is recognized by tax authorities as an expense that a business actually incurs so when the income statement is calculated, depreciation needs to be removed as the expense that it is so that taxes can be calculated on the profit.
Depreciation however, does not take actual cash from the company i.e the company does not actually pay anyone cash for depreciation like most other expenses. It needs therefore to be added back to the Free Cash Flow because the FCF deals with how much actual cash the company has which is something that Depreciation being a non-cash expense did not reduce.
<span>The probability of incurring bankruptcy increases as a firm's debt/equity ratio decreases.
FALSE</span>
Answer:
$520,000
Explanation:
Kela corporation reports a net income of $450,000
The depreciation is $70,000
A cash of $50,000 was borrowed on a 5-year note payable
Therefore, the total cash inflows from operating activities can be calculated as follows
= Net income+depreciation
= $450,000+$70,000
= $520,000
Hence the total cash inflow from operating activities is $520,000
The impact of a federal budget deficit on interest rates and the trade balance is that it can bring about the inflow of foreign financial capital as well as a better exchange rate.
<h3>How can budget deficit have effect on trade balance?</h3>
When there is a stronger exchange rate there will be a little bit difficult for all the exporters that want to sell their goods to foreign countries, and at this time the imports will become cheaper.
In this case, trade deficit will definitely bring about an inflow of foreign financial capital as well as a good exchange rate.
Learn more about budget deficit on:
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