Which of the following statements is CORRECT? Free cash flow (FCF) is, essential
ID: 2637958 • Letter: W
Question
Which of the following statements is CORRECT?
Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations.
After-tax operating income is calculated as EBIT(1 - T) + Depreciation.
Two firms with identical sales and operating costs but with different amounts of debt and tax rates will have different operating incomes by definition.
If a firm is reporting its income in accordance with generally accepted accounting principles, then its net income as reported on the income statement should be equal to its free cash flow.
Retained earnings as reported on the balance sheet represent cash and, therefore, are available to distribute to stockholders as dividends or any other required cash payments to creditors and suppliers.
Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations.
After-tax operating income is calculated as EBIT(1 - T) + Depreciation.
Two firms with identical sales and operating costs but with different amounts of debt and tax rates will have different operating incomes by definition.
If a firm is reporting its income in accordance with generally accepted accounting principles, then its net income as reported on the income statement should be equal to its free cash flow.
Retained earnings as reported on the balance sheet represent cash and, therefore, are available to distribute to stockholders as dividends or any other required cash payments to creditors and suppliers.
Explanation / Answer
Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations.
Two firms with identical sales and operating costs but with different amounts of debt and tax rates will have different operating incomes by definition
Two firms with identical sales and operating costs but with different amounts of debt and tax rates will have different operating incomes by definition
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.