Which of the following statements is CORRECT? A. Net cash flow (NCF) is defined

Question

Which of the following statements is CORRECT?

A. Net cash flow (NCF) is defined as follows:
NCF = Net income - Depreciation and Amortization.

B. Changes in working capital have no effect on free cash flow.

C. Free cash flow (FCF) is defined as follows:
FCF = EBIT(1 - T)
        + Depreciation and Amortization
        - Capital expenditures required to sustain operations
        - Required changes in net operating working capital.

D. Free cash flow (FCF) is defined as follows:
FCF = EBIT(1 - T)+ Depreciation and Amortization + Capital expenditures.

Net cash flow is the same as free cash flow (FCF).

A. Net cash flow (NCF) is defined as follows:
NCF = Net income - Depreciation and Amortization.

B. Changes in working capital have no effect on free cash flow.

C. Free cash flow (FCF) is defined as follows:
FCF = EBIT(1 - T)
        + Depreciation and Amortization
        - Capital expenditures required to sustain operations
        - Required changes in net operating working capital.

D. Free cash flow (FCF) is defined as follows:
FCF = EBIT(1 - T)+ Depreciation and Amortization + Capital expenditures.

Net cash flow is the same as free cash flow (FCF).

Explanation / Answer

D. Free cash flow (FCF) is defined as follows:
FCF = EBIT(1 - T)+ Depreciation and Amortization + Capital expenditures.

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