Free Cash Flow Is Calculated as Net Cash Provided by Operating

question 9

Multiple Choice

Free cash flow is calculated as net cash provided by operating activities less:

• A) dividends.
• B) capital expenditures and depreciation.
• C) capital expenditures.
• D) capital expenditures and dividends.

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Definitions:

ATC

Stands for Average Total Cost, which is the total cost per unit of output produced.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, remaining constant regardless of the business activity.

AVC

Average Variable Cost is the total variable costs divided by the quantity of output, representing the variable cost per unit of output.

MC = MR

An economic principle stating that to maximize profits, firms should produce up to the point where marginal cost equals marginal revenue.