16. To calculate the enterprise valuation cash flow, one begins with which of th

Question

16. To calculate the enterprise valuation cash flow, one begins with which of the following terms from the income statement?

a. Net sales

b. Current assets

c. (earning before interest and taxes)*(1-enterprise tax rate)

d. Net income

e. Net income times the enterprise tax rate

20. Which of the following is never a component of a preferred stock's security structure?

a. the right to participate in any dividends paid to common stock shareholders

b. payment of dividends in the form of additional shares of preferred stock

c. the option for the holder to convert preferred stock into common stock

d. the option for the venture to call outstanding preferred stock

Explanation / Answer

16. d. Net Income

To start a cash flow, one begins with the net income and than deduct or add the non-cash expenses and cash expenses to finally arrive at the cash balance as per balance sheet.

20. None of the above

All of the given options may be included in the preferred stock's security structure.

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