Free cash flow is
A) all cash in the bank
B) cash from operations
C) cash from financing less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends
D) cash flow from operations less cash used to purchase fixed assets to maintain productive capacity

Question

Quizplus · Accepted Answer

Free cash flow is the cash generated from operations after deducting the cash used for capital expenditures to maintain productive capacity. Choice A is incorrect because free cash flow is not equal to all cash in the bank. Choice B is incorrect because it does not take into account capital expenditures. Choice C is incorrect because it includes cash used for dividends, which is not included in the calculation of free cash flow. Therefore, the correct answer is D.

Free Cash Flow Is