The Extent to Which a Firm Adjusts Net Income for Changes

Multiple Choice

The extent to which a firm adjusts net income for changes in noncurrent assets and noncurrent liabilities in deriving cash flow from operations depends on the nature of its operations. _____ usually show an addback for deferred tax expense, whereas firms that _____ show a subtraction.

A) Rapidly growing firms; have operating losses
B) Firms that have operating losses; are profitable
C) Profitable firms; have operating losses
D) Firms that stop growing or that shrink; rapidly growing firms
E) Rapidly growing firms; stop growing or that shrink