Cash flows available to pay the firm's stockholders and debt holders after the firm has made the necessary working capital investments, fixed asset investments, and developed the necessary new products to sustain the firm's ongoing operations is referred to as:

Question

Quizplus · Accepted Answer

The cash flows available to pay the firm's stockholders and debt holders after deducting the necessary working capital and capital expenditures is referred to as free cash flow. It is an important financial metric used by investors to evaluate a company's ability to generate cash profits. Options A and B are not correct as operating cash flow only considers the cash inflows and outflows associated with the firm's ongoing operations, and net operating working capital only considers the difference between current operating assets and operating liabilities.

Cash Flows Available to Pay the Firm's Stockholders and Debt