Q14-14RQ
Question
Question: What is free cash flow, and how is it calculated?
Step-by-Step Solution
Verified Answer
Answer
Free cash flow is the cash available with the company for new opportunities.
1Step 1: Definition of free cash flow
Free cash flow is the earnings available with the organization from operating activities after reducing planned long-term investments and cash payment of dividend to the stockholders.
2Step 2: Format of statement of free cash flow
Particulars |
| Amount($) |
Net cash provided by operating activities |
|
|
Cash payments planned for investments in long-term assets |
|
|
Cash dividends |
|
|
Free cash flow |
|
|
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