Which of the Following Statements Is CORRECT

question 50

Multiple Choice

Which of the following statements is CORRECT?

• A) Most rapidly growing companies have positive free cash flows because cash flows from existing operations generally exceed fixed asset purchases and changes to net working capital.
• B) Changes in working capital have no effect on free cash flow.
• C) Free cash flow (FCF) is defined as follows:
• FCF = EBIT(1 - T)
• + Depreciation
• - Capital expenditures required to sustain operations
• - Required changes in net working capital.
• D) Free cash flow (FCF) is defined as follows:
• FCF = EBIT(1 - T) + Capital expenditures.
• E) Managers should be less concerned with free cash flow than with accounting net income. Accounting net income is the "bottom line" and represents how much the firm can distribute to all its investors both creditors and stockholders.

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Definitions:

Customer-Driven Production

A manufacturing approach focused on producing goods based on consumer demands and preferences.

Continuous Production

A process where raw materials or inputs are continuously fed into production equipment, and products come out continuously, typical for industries with high demand or in chemical manufacturing.

Blast Furnaces

Large industrial furnaces used to extract iron from its ore by a process involving heat and the reduction of the ore at high temperatures.

LEED

Leadership in Energy and Environmental Design, a globally recognized green building certification system promoting environmental responsibility.