Question

Cash flows is the most relevant variable to measure the returns on debt instruments, while GAAP net income is the most relevant variable to measure the returns on common stock.

a) true
b) false

Answer 1

b) false

Step-by-step explanation:

Cash flow determines the cash position of the company whether the company is able to pay the obligations or not. It could be determined by analyzing the inflows of cash and outflows of cash

While on the other hand GAAP is the accounting principle that is compuslory for each and every organization to follow it

Therefore the given statement is false