Changes to net operating working capital

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Reference no: EM131591594

Which of the following statements is CORRECT?

a. Most rapidly growing companies have positive free cash flows because cash flows from existing operations generally exceed fixed asset purchases and changes to net operating working capital.

b. Free cash flow (FCF) is defined as follows: FCF= Profit after taxes + Depreciation and Amortization - Capital expenditures (CAPEX) -Change in Operating Current Assets +Change in Operating Current Liabilities. + Aftertax interest payments on debt - Aftertax interest on cash & St. Invests

c. Free cash flow (FCF) is defined as follows: FCF = EBIT(1 - T) + Capital expenditures.

d. Managers should be less concerned with free cash flow than with accounting net income. Accounting net income is the "bottom line" and represents how much the firm can distribute to all its investors both creditors and stockholders.

Reference no: EM131591594

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