Which of the Following Is Not a Component of Free

question 131

Multiple Choice

Which of the following is not a component of free cash flow?

• A)Purchases of plant assets
• B)Net income
• C)Dividends
• D)Net cash flows from operating activities

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Definitions:

Contribution Margin Ratio

A financial ratio that shows how much of a company's sales revenue is available to cover its fixed costs and contribute to net profit, calculated as contribution margin divided by sales revenue.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance.

Break-Even Point

The financial state where a company's total revenues equal its total costs, resulting in neither profit nor loss.

Variable Costs

Costs that fluctuate in direct proportion to changes in production or sales volume, such as raw materials and labor.