Question

Free cash flow is defined as ________________.a. cash flows available for payments to stockholders of a firm after the firm has made payments to all others with claims against it.b. cash flows available for payments to stockholders and debt holders of a firm after the firm has made investments in assets necessary to sustain the ongoing operations of the firm.c. cash flows available for payments to stockholders and debt holders of a firm after the firm has made payments necessary to vendors.d. cash flows available for payments to stockholders and debt holders of a firm that would be tax-free to the recipients.

Answer 1

The correct answer is letter "B": cash flows available for payments to stockholders and debt holders of a firm after the firm has made investments in assets necessary to sustain the ongoing operations of the firm.

Step-by-step explanation:

Free Cash Flow is the form of cash flow that is available to all the stakeholders of the company and is the main focus when valuing the company. It is the amount of money left after the firm used revenue for reinvestment necessary to keep the business up and running.

Answer 2

Answer: b. cash flows available for payments to stockholders and debt holders of a firm after the firm has made investments in assets necessary to sustain the ongoing operations of the firm

Step-by-step explanation:

Free cash flow is also known as FCF, It is the amount of cash a company was able to generate after paying their debt and other commitments. It is the amount of money a company creates after giving details about the amount of capital required as well as capital spending of such organization. Free cash flow helps to measure the financial achievement of an organization.