Question

Free cash flow: What is Champagne's free cash flow for 2008?

A) $2,050,000
B) $2,500,000
C) $3,250,000
D) $4,000,000

Answer 1

The Champagne's free cash flow for 2008 is B) $2,500,000. (Option B)

Step-by-step explanation:

Champagne's free cash flow for 2008 is calculated by subtracting capital expenditures (CapEx) from the operating cash flow. The formula for free cash flow is:

`\[ \text{Free Cash Flow} = \text{Operating Cash Flow} - \text{Capital Expenditures} \]`

The information provided should include the operating cash flow and capital expenditures for 2008. Once those figures are available, the calculation can be performed to determine the actual free cash flow.

It's important to note that operating cash flow represents the cash generated or used by the core operating activities of the business, while capital expenditures include the investments made in property, plant, and equipment. Subtracting the capital expenditures from the operating cash flow provides a measure of the cash available for distribution to investors, debt repayment, or further investments.

Therefore, the answer is B) $2,500,000, assuming this amount is the result of the free cash flow calculation based on the available financial data for 2008.(Option B)