Free cash flow represents Select one: a. cash provided by operations less adjustments for capital expenditures and dividends. b. a measurement of a company's cash generating ability. c. a measure of solvency. d. All of these answer choices are correct.

Question

Jarrett Esparza

Business

27 August, 15:24

Free cash flow represents Select one: a. cash provided by operations less adjustments for capital expenditures and dividends. b. a measurement of a company's cash generating ability. c. a measure of solvency. d. All of these answer choices are correct.

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Answers (1)

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Giselle · Answer 1

d. All of these answer choices are correct

Explanation:

Free cash flows represents the cash available for distribution to equity holders.

Thus, any cash flow represented and provided by operations after providing for capital expenditures and dividends is = cash available for equity.

Therefore, free cash flow represents the company's cash generating capacity and ability.

While computing NPV, free cash flow available is considered as it represents the solvency of company.

Thus, all of the above statements are correct.