Which of these statements is correct? Free cash flow
A) is available to be paid out to investors as interest or dividends, or to repay debt or buy back stock.
B) is positive if the company is issuing debt or stock.
C) is equal to net income.
D) is another term for retained earnings.

Question

Quizplus · Accepted Answer

Free cash flow represents the cash that is remaining after all the expenses and capital expenditures have been accounted for. This cash can be used to pay out interest or dividends to investors, repay debt, or buy back stock. It is not necessary that free cash flow will always be positive if the company is issuing debt or stock. It is also not equal to net income or another term for retained earnings.

Which of These Statements Is Correct? Free Cash Flow