The cash flow of the firm must be equal to the:
A)cash flow to stockholders minus the cash flow to creditors.
B)cash flow to creditors minus the cash flow to stockholders.
C)cash flow to governments plus the cash flow to stockholders.
D)cash flow to stockholders plus the cash flow to creditors.
E)aftertax operating cash flow.

Question

Quizplus · Accepted Answer

The cash flow of the firm must be equal to the cash flow to stockholders plus the cash flow to creditors. This is because the cash flow to stockholders represents the dividends paid out to shareholders and the cash flow to creditors represents the interest and principal payments made on the firm's debt obligations. Together, these two sources of cash flow represent the firm's total cash flow.

The Cash Flow of the Firm Must Be Equal to The