Asked by Akyaira Stinson on Jun 30, 2024
Verified
Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current operations.
Free Cash Flow
The amount of operating cash flow available to a company after it purchases the property, plant, and equipment necessary to maintain its current operations, computed as cash flows from operating activities less cash used to purchase property, plant, and equipment.
Operating Cash Flow
Cash generated from the core business operations of a company, excluding financing and investment activities.
- Understand the concept and calculation of free cash flow.
Verified Answer
AK
Anastacia KuzminaJul 01, 2024
Final Answer :
True
Explanation :
Free cash flow is calculated by subtracting capital expenditures (fixed asset additions) from operating cash flow. This provides the amount of cash available for purposes such as debt reduction, share repurchases, and dividend payments.
Learning Objectives
- Understand the concept and calculation of free cash flow.