Free cash flows are:
A) liquid financial assets for which investments in current businesses are no longer economically viable.
B) liquid financial assets that for tax purposes must be reinvested in the firm if not distributed as dividends to shareholders.
C) the profits resulting after a restructured firm has been sold.
D) dividends that have been distributed to shareholders that are taxed as capital gains.

Question

Quizplus · Accepted Answer

Free cash flows are excess cash flow generated by a business after it has met all financial obligations. It represents the amount of cash available for distribution to investors or reinvestment in the business. Free cash flows are typically used for reinvestment in the business or for distribution to shareholders in the form of dividends or share buybacks. Therefore, option A is the best choice because it accurately describes free cash flows.

Free Cash Flows Are