Free cash flow is cash from operations, less cash for

Question

Quizplus · Accepted Answer

Free cash flow is a measure of a company's ability to generate cash from its operations after accounting for capital expenditures needed to maintain productivity and dividends paid to shareholders. Therefore, it is calculated by subtracting cash used for both fixed asset maintenance and dividends from cash generated from operations. Option A correctly identifies these two components of free cash flow, while options B and D include additional cash outflows beyond those that reduce free cash flow. Option C fails to account for dividends, which are a key determinant of free cash flow.

Free Cash Flow Is Cash from Operations, Less Cash for