Question

Free cash flow is a positive cash flow from operating activities:

multiple choice
A. beyond what is needed to replace current property, plant, and equipment and pay cash dividends.
b. across all three activity components of the statement of cash flows.
c. beyond what has been allotted for future property, plant, and equipment replacement and expansion.
d. across both financing and investing activities.

Answer 1

The correct answer is A. Beyond what is needed to replace current property, plant, and equipment and pay cash dividends.

Step-by-step explanation:

The correct answer is A. Beyond what is needed to replace current property, plant, and equipment and pay cash dividends. Free cash flow is a financial metric that represents the amount of cash generated by a company's operations that is available to be used for various purposes. It is calculated by subtracting capital expenditures and dividends from operating cash flow.

In other words, free cash flow is the positive cash flow from operating activities beyond what is needed to replace current property, plant, and equipment and pay cash dividends.