📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    Free cash flow to the firm from net income is equivalent

    to:
    A Net Income + noncash charges + after-tax interest – capital expenditure – working capital investment Correct Answer Incorrect Answer
    B Net Income + non-cash charges + interest – capital expenditure – working capital investment Correct Answer Incorrect Answer
    C Net Income + non-cash charges + interest – capital expenditure Correct Answer Incorrect Answer
    D Net Income + after tax interest – capital expenditure – working capital investment Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Free cash flow (FCF) is the cash a company generates after taking into consideration cash outflows that support its operations and maintain its capital assets. In other words, free cash flow is the cash left over after a company pays for its operating expenses and capital expenditures (CapEx). It can be calculated as follows: Free cash flow to the firm = Net Income + non-cash charges + after tax interest – capital expenditure – working capital investment

    Practice Next
    More Banking System in India Questions
    ask-question