CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

A corporation's free cash flow is its ______
A. cash flow from operating activities that is not subject to income taxes.
B. cash flow from operating activities available after basic business obligations have been met.
C. cash flow from operating activities less all cash payments for investing and financing activities.

User Contributed Comments 5

User Comment
Maxence FCF = Operating - Capex... Can someone explain why it is not D)?
CocaColas Had answered C too. BUT, C is actually about the accounting cash flow measure, not FCF...
cfahanoi Free cash flow = CFO - (depreciation or Capital expenditure) to maintain the current production capacity
patsy The last choice says ALL cash flows for investing (true) and financing (not true). FCF = CFO - Capex - Dividends.
ThePessimist Actually, not even all cash flows for investing are included. For example, if a company makes an acquisition or buys a bunch of bonds, that's CFI but doesn't reduce FCF (since it was a discretionary use of cash).
You need to log in first to add your comment.