Which of the Following Statements Is FALSE

question 35

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:

Statement Of Owner's Equity

A financial document showing the changes in the equity of a company during a specific period, through investments, withdrawals, and net income or loss.

Balance Sheet

A financial statement that summarizes an entity's assets, liabilities, and shareholders' equity at a specific point in time.

Financial Statements

Formal records of the financial activities and position of a business, individual, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Trial Balance

A financial statement that lists all the accounts of a company and their balances at a particular time, used to ensure that debits equal credits.