Question

Which of the following is the term used to describe the excess of cash flows from operations over the amount of cash outflows used to replace property, plant, and equipment and to fund financing outflows of cash for dividends to stockholders?

a. Cash equivalents
b. Expansion cash flow
c. Free cash flow
d. Working capital

Answer 1

C) Free cash flow

Step-by-step explanation:

A free cash flow (FCF) is how much cash a company has left after paying all the expenses related to its operations and capital expenditures excluding depreciation.

FCFs are used to determine a company's value and to determine how profitable or not a new or existing project might be. The discounted FCF method is the most commonly used method to value a company.