- CFA Exams
- CFA Exam: Level II 2021
- Study Session 10. Equity Valuation (2)
- Reading 26. Industry and Company Analysis
- Subject 2. Income statement modeling: operating costs and non-operating costs
CFA Practice Question
Tax credits and withholding tax on dividends can cause differences between:
B. the statutory tax rate and the cash tax rate.
C. the cash tax rate and the effective tax rate.
A. the statutory tax rate and the effective tax rate.
B. the statutory tax rate and the cash tax rate.
C. the cash tax rate and the effective tax rate.
Correct Answer: A
User Contributed Comments 2
| User | Comment |
|---|---|
| tpraturi | Tax credits, withholding taxes on dividends, adjustments from previous years tax returns, expenses Not deductible for tax purposes are some of the reasons for difference between Statutory tax rate and Effective tax rate |
| CFAJ | Statutory tax rate = legally imposed tax rate Cash tax rate = tax expense/NI before tax Effective tax rate = tax expense / NI before tax |