FSA: reading 22, q2: if switch from straight line depreciatio to accelaterate, it will reduce NI in beginning year, so net profit margin would decrease(A) it will reduce net PP&E, so asset turnover would increase(B) and increase Tax saving, so CFO will increase.© but I don’t know why A, B is wrong. any comments? Thanks.
Net profit margin may not decrease because you will be paying less tax, so NI may be same or higher, we don’t know. However, asset turnover does seem to increase, so I’m not sure if there is a mistake here or not…can someone comment? C is correct.
this has been discussed a million times- it’s an error
darn…it’s also there in 2010! How long does it take them to fix these things?
how is tax here calculated? net profit margin is ni/sale, if depreciation increase, then EBIT reduced so ni after apply the tax rate, why NI might not get decrease?Thanks. Dreary Wrote: ------------------------------------------------------- > Net profit margin may not decrease because you > will be paying less tax, so NI may be same or > higher, we don’t know. However, asset turnover > does seem to increase, so I’m not sure if there is > a mistake here or not…can someone comment? C > is correct.