firm's capital structure does not affect its calculated free cash flows, because FCF reflects only operating cash flows.

Question

Quizplus · Accepted Answer

Free cash flows are a measure of a company's operating cash flow available after capital expenditures needed to maintain or expand the business. The capital structure, which refers to the mix of debt and equity financing used by a company, does not affect the amount of operating cash flows generated by a company and therefore does not impact the calculation of free cash flows.

Firm's Capital Structure Does Not Affect Its Calculated Free Cash