Why is depreciation expense added back to the net income of a company to find the operating

Question:

Why is depreciation expense added back to the net income of a company to find the operating cash flow?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Management Core Concepts

ISBN: 978-0133866698

3rd edition

Authors: Raymond M Brooks

See More Books

Question Posted: Oct 31, 2017 08:19 AM

See More Questions

Why is depreciation expense added to net income (indirect method) on the statement of cash flows?
Under the indirect method of preparing a statement of cash ows, why is depreciation expense added to net income when determining net cash ow from operating activities?
Why is depreciation expense added to net earnings on the statement of cash flows when using the indirect method of reporting cash flow from operations?
The contingency table shown relates happiness and gender for the 2012 GSS. a. Identify the response variable and the explanatory variable. b. Construct a table or graph showing the conditional...
The two blocks (m = 16 kg and M = 88 kg) in Fig. 6-39 are not attached to each other. The coefficient of static friction between the blocks is ? s = 0.38, but the surface beneath the larger block is...
Output from a software package follows: (a) Fill in the missing items. What conclusions would you draw? (b) Is this a one-sided or a two-sided test? (c) If the hypothesis had been H 0 :...
What are the four concepts that are essential to the extended object-oriented approach to software development?
The common-size balance sheets from five companies follow: Alcoa, a major producer of aluminum products; Delta Air Lines, a major airline; Duke Energy, a leading energy company focused on electric...
Dennis purchased $250 000 in 182-day T-bills 100 days before maturity to yield 3% on simple discount. After holding it for 50 days, Dennis sold the T-bill at yield of 3.5% on discount basis a) How...
1. In what respects is the change consistent with Alfred Chandlers phrase, structure follows strategy? 2. Why do investors think that the new Alphabet structure is worth an extra $29 billion?
All six decision models from Chapter 9 rely on the appropriate timing and amount of cash flow. What are the potential errors a manager can make if this information is not accurate?
Why are owners of a business only interested only in incremental cash flow for a project and not the total cash flow of a project?
In Problem inspect the graph of the function to determine whether it is concave up, concave down, or neither, on the given interval. The cube root function, p(x) = 3 x, on (0, )
When it comes to innovative problem solving, in which role (explorer, artist, judge, or warrior) do you excel, and which role must you work to develop?
Can government assignment and enforcement of property rights internalize an externality? Will this approach work as well as, better than, or worse than direct government intervention? Explain your...
How do you express emotion when communicating with various forms of technology covered in this chapter?
The rise of apps such as Uber and Lyft has generated considerable debate among policy makers and politicians in major urban areas over whether these services are net harmful or beneficial. The debate...
Discuss an example of a time when you misunderstood another person in a text message, an email, or an instant message. How did you respond to the misunderstanding? Did you and the other person clear...
In Statement of Financial Accounting Standards No. 95, the Financial Accounting Standards Board (FASB) recommended but did not require that companies use the direct method. In Appendix B, Paragraphs...
The following information is for Montreal Gloves Inc. for the year 2020: Manufacturing costs Number of gloves manufactured Beginning inventory $ 3,016,700 311,000 pairs 0 pairs Sales in 2020 were...
Mr. Malone wants to change the overall risk of his portfolio. Currently his portfolio is a combination of risky assets with a beta of 1.25 and an expected return of 14%. Mr. Malone will add a...
Ms. Chambers wants to change the expected return of her portfolio. Currently Ms. Chambers has all her money in U.S. Treasury Bills with a return of 3%. She can switch some of her money into a risky...
Royal Seattle Investment Club has $100,000 to invest in the equity market. Frasier advocates investing the funds in KSEA Radio with a beta of 1.3 and an expected return of 16%. Niles advocates...
There are peer effects, but they differ for the two individuals, u_{1} = x_{1} - x_{1} ^ 2 + beta_{1}*x_{1}*x_{2} with B_{1} = 1 U_{2} = O - x_{2} ^ 2 + beta_{2}*x_{1}*x_{2} with B_{2} = 0 1) Find...
How do emerging technologies, such as AI and data analytics, impact the evolution of performance management practices ?
The controller for Rainbow Children's Hospital, located in Munich, Germany, estimates that the hospital uses 38 kilowatt-hours of electricity per patient-day, and that the electric rate will be 0.26...

Why is depreciation expense added back to the net income of a company to find the operating

Question:

Step by Step Answer:

Depreciation expense is a non cash flow item in the income statement ...View the full answer

Financial Management Core Concepts

Students also viewed these Financial Accounting questions