3 Planned investments and cash dividends are deducted A net

3) Planned investments and cash dividends are deducted A) net cash provided by operating activities B) net cash provided by investing activities C) net cash provided by financing activities D) net income from to arrive at free cash flow.

Solution

Ans: A

The free cash flow/operating cash flow ratio measures the relationship between free cash flow and operating cash flow.Free cash flow is most often defined as operating cash flow minus capital expenditures, which, in analytical terms, are considered to be an essential outflow of funds to maintain a company\'s competitiveness and efficiency. The cash flow remaining after this deduction is considered \"free\" cash flow, which becomes available to a company to use for expansion, acquisitions, and/or financial stability to weather difficult market conditions. The higher the percentage of free cash flow embedded in a company\'s operating cash flow, the greater the financial strength of the company.Free cashflow is an assessment of the amount of cash a company generates after accounting for all capital expenditures, such as buildings or property, plant and equipment. The excess cash is used to expand production, develop new products, make acquisitions, pay dividends and reduce debt.