Asked by Seema AlHiraki on Jul 22, 2024
Verified
Operating cash flow minus cash outlays to replace existing operating capacity is free cash flow.
Operating Cash Flow
Cash generated from the core business operations of a company, excluding financing and investing activities.
Cash Outlays
Refers to the actual disbursement of cash, including expenses, investments, and any other payments made by a business or an individual.
- Realize the significance of free cash flow when assessing value and making investment determinations.
Verified Answer
FB
Felicia BurnsJul 26, 2024
Final Answer :
True
Explanation :
Free cash flow is the cash flow available for the company to use for new investments, debt repayment, dividend payments or share buybacks after accounting for necessary expenditures to maintain a company's current operations. This is calculated as operating cash flow minus capital expenditures.
Learning Objectives
- Realize the significance of free cash flow when assessing value and making investment determinations.
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