The Conceptual Framework for Free Cash Flows Separates All Assets

question 39

Multiple Choice

The conceptual framework for free cash flows separates all assets and liabilities into the following categories:

• A) Current and non-current
• B) Monetary and non-monetary
• C) Operating and non-operating
• D) Operating and financial

---

Definitions:

Arithmetic Average

The simple mean calculated by adding a set of values and then dividing by the number of values.

Geometric Average

The nth root of the product of n numbers, used to calculate average rates of return over time for investments that undergo compounding.

Compounding

The process where an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.

Effective Annual Rates

The interest rate on an investment or loan that considers the effects of compounding over a year.