What is the formula for calculating Earnings After Cash Disbursements (EACD)?

Earnings After Cash Disbursements (EACD) is calculated by taking into account various financial components. The formula includes the allocation of assets and liabilities, represented by AF (Asset Funds), DF (Debt Funds), IC (Investment Capital), and MR (Net Revenue), and then adjusting for the cash disbursements made during the period.

The correct formula starts with adding the relevant financial components together—this aggregation reflects the total income or assets before considering the cash that has been expended. After these factors are summed up, it is crucial to deduct the cash disbursements. This deduction reveals what remains after those expenditures, which is essential for understanding true earnings.

The formula captures the essence of determining net earnings after accounting for necessary cash outflows, which is significant for financial reporting and analysis. Therefore, the choice that incorporates the correct arithmetic operation—adding the relevant components and then subtracting cash disbursements—authenticates it as the appropriate method to compute EACD.