Free cash flow is equal to the cash flow from operating activities less cash payments:
A)for inventory purchases.
B)for planned investments and cash dividends.
C)to retire bonds.
D)for planned salary raises.

Question

Quizplus · Accepted Answer

Free cash flow is the cash flow available for distribution to investors, financing for future growth, or retiring debt after planned investments and dividend payments have been made. Therefore, Option B is correct as it reflects cash payments made for planned investments and cash dividends. The other options are not relevant to calculating free cash flow.

Free Cash Flow Is Equal to the Cash Flow from Operating