- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 5. Analyzing Statements of Cash Flows II
- Subject 3. Free Cash Flow Measures
CFA Practice Question
Free cash flow can be measured as ______.
B. cash from operations - capital expenditure
C. net income + depreciation expense
A. cash - current liabilities
B. cash from operations - capital expenditure
C. net income + depreciation expense
Correct Answer: B
User Contributed Comments 3
| User | Comment |
|---|---|
| chantal | In business valuation theory cash from operations - capital exenditures is defines as unlevered cash flows, ie cash flows which are available to repay debt or declare dividends. Free cash flow is defines as the amount of cash flows which are available to shareholders, ie after debt repayment... Consequently, it would appear that the formula for free cash flow must also deduct debt repayment obligations... |
| johntan1979 | Choose the best answer available: B |
| Inaganti6 | johntan marry me |