Free cash flows to all debt and common equity shareholders represents the excess of cash flows from:
A) operating activities over cash flows for financing activities
B) investing over cash flows for operating activities
C) investing over cash flows for financing activities
D) operating activities over cash flows for investing activities

Question

Quizplus · Accepted Answer

Free cash flows to all debt and common equity shareholders represents the excess of cash flows from operating activities over cash flows for investing activities. This is because investing activities involve capital expenditures and other investments that have to be deducted from operating cash flows to arrive at the free cash flows available to shareholders. Choice D is the only option that matches this description.

Free Cash Flows to All Debt and Common Equity Shareholders