The concept of free cash flow is to measure the amount of cash that a company generates
A) from its operations that is in excess of cash required.
B) from its investing activities that is in excess of cash required.
C) from its financing activities that is in excess of cash required.
D) from its operations that is in below the cash required.

Question

Quizplus · Accepted Answer

Free cash flow measures the amount of cash that a company generates from its operations that is in excess of the cash required to maintain or expand its asset base. This means it takes into account the cash used to invest in new equipment, pay off debt and pay out shareholder dividends. It is an important measure of a company's financial health as it indicates how much cash it has available to grow the business or pay out to shareholders.

The Concept of Free Cash Flow Is to Measure the Amount