A measure of a company's financial flexibility is the
A) cash debt coverage.
B) current cash debt coverage.
C) free cash flow.
D) cash debt coverage and free cash flow.

Question

Quizplus · Accepted Answer

Cash debt coverage and free cash flow are both measures of a company's financial flexibility. Cash debt coverage assesses the company's ability to repay its debts from its operating cash flow, indicating its long-term solvency. Free cash flow measures how much cash a company generates after accounting for cash outflows to support operations and maintain its capital assets, indicating the company's ability to pursue opportunities that enhance shareholder value.

A Measure of a Company's Financial Flexibility Is the