Which of the Following Statements Is CORRECT

question 104

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 operating 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 operating 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:

Wilmot Proviso

A proposed amendment to a bill in the U.S. Congress in 1846 aiming to ban slavery in territory acquired from Mexico.

Fugitive Slave Law of 1850

Part of the Compromise of 1850, this law required citizens to assist in the capture of runaway slaves and denied fugitives the right to a jury trial.

Northwest Ordinance

A law passed in 1787 by the Congress of the Confederation of the United States to create a structured process for territories in the Northwest to become states.

Missouri Compromise

A legislative agreement passed in 1820 between the pro-slavery and anti-slavery factions in the United States Congress, involving primarily the regulation of slavery in the western territories.