Which of the Following Statements Is False

question 67

Multiple Choice

Which of the following statements is false?

• A) The more cash the firm uses to repurchase shares, the less it has available to pay dividends.
• B) Free cash flow measures the cash generated by the firm after payments to debt or equity holders are considered.
• C) We estimate a firm's current enterprise value by computing the present value of the firm's free cash flow.
• D) We can interpret the enterprise value as the net cost of acquiring the firm's equity, taking its cash and paying off all debts.

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Definitions:

Subtotal Amounts

Intermediate sums calculated by adding together certain items, typically within a larger calculation or accounting process.

Trial Balance

An accounting report that lists the balances of all ledgers accounts in two columns, debits and credits, to ensure that the total debits equal total credits.

Chart of Accounts

An organized list of all the accounts in a company's general ledger, used for recording transactions and preparing financial statements.

Statement of Owner's Equity

A financial document showing the changes in the equity of a business over a specific period, including contributions, withdrawals, and earnings.