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Question
Free cash flow (FCF) and net income (NI) differ in the following ways:
I) net income is the return to shareholders, calculated after interest expense; free cash flow is calculated before interest.
II) net income is calculated after various non-cash expenses, including depreciation; we add back depreciation when we calculate free cash flow.
III) capital expenditures and investments in working capital do not appear in net income calculations; they do reduce free cash flows.
IV) net income is never negative; free cash flows can be negative for rapidly growing firms, even if the firm is profitable, because investments exceed cash flows from operations.
A. I only
B. I and II only
C. I, II and III only
D. I, II, III and IV
Answer
This answer is hidden. It contains 15 characters.
Related questions
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Suppose VS's stock price is currently $20. In the next six months it will either fall to $10 or rise to $30. What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5% (periodic rate).
A. $5.00
B. $2.14
C. $0.86
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Q:
Suppose Ralph's stock price is currently $50. In the next six months it will either fall to $30 or rise to $80. What is the option delta of a call option with an exercise price of $50?
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B. Lend PV of $50 and sell two calls
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B. Fall exactly by the amount of the dividend
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One key assumption of the Miller and Modigliani (MM) dividend irrelevance argument is that:
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