All of the Following Statements About Free Cash Flow Are

question 175

Multiple Choice

All of the following statements about free cash flow are false except

• A)significant free cash flow indicates less potential to finance new investment.
• B)free cash flow is most commonly calculated by subtracting capital expenditures from cash provided by operations and then adding cash dividends.
• C)free cash flow is not reported on the statement of cash flows.
• D)significant free cash flow indicates less potential to pay additional dividends.

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on the current price to sell an asset or settle a liability in an orderly transaction.

Controlling Influence

The power or authority to govern or direct the management and policies of another entity without necessarily having majority ownership.

Voting Stock

Shares that give the shareholder the right to vote on matters of corporate policy and the election of the board of directors.

Equity Changes

Refers to variations in the owners' equity in a business over time due to earned income, distribution of profits, investments, and withdrawals.