CFA Practice Question

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CFA Practice Question

Free cash flow can be measured as ______.

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
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