Which of the Following Equations Correctly Defines Free Cash Flow

question 19

Multiple Choice

Which of the following equations correctly defines Free Cash Flow?

• A) EBIT × (1-tax rate) + CCA - Net Investment- Change in Working Capital
• B) (Gross Profit - Depreciation) × (1-tax rate) - Net Investment - Change in Working Capital
• C) (Gross Profit - Capital Cost Allowance) - Net Investment - Change in Working Capital
• D) (Gross Profit - Depreciation) - Net Investment - Change in Working Capital

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Definitions:

Validity Effect

A phenomenon where a statement is more likely to be perceived as true the more it is repeated, regardless of its actual veracity.

Repeated Statements

The act of saying or presenting the same information multiple times to reinforce a message or ensure understanding.

Altruism

The belief in or practice of disinterested and selfless concern for the well-being of others.

Selfless Action

An act performed with no expectation of reward or recognition, often motivated by a desire to help or benefit others.