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QUESTION 45 A recent tax rate hike has contributed to a companys increased operating cash flows through increased income tax benefits from employee stock options

QUESTION 45

  1. A recent tax rate hike has contributed to a companys increased operating cash flows through increased income tax benefits from employee stock options which were solely attributed to the tax rate hike. In order to further increase operating cash flows, it has also resorted to the securitization of its accounts receivable. Comment on the sustainability of these as sources of operating cash flow for the company.

a.

Both the securitization and tax hike are sustainable sources of operating cash flow.

b.

Neither the securitization nor tax hike are sustainable sources of operating cash flow.

c.

Only the securitization is a sustainable sources of operating cash flow.

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