The financial measure, free cash flow takes into account the idea that managers need to make capital investments to maintain or expand the company's fixed assets.

Question

Quizplus · Accepted Answer

Free cash flow measures the amount of cash generated by the company's operations after accounting for capital expenditures needed to maintain or expand fixed assets. Therefore, free cash flow does take into account the need for capital investments.

The Financial Measure, Free Cash Flow Takes into Account the Idea