About the cash flow of the firm

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Reference no: EM131448432

Select all that is true about the Cash flow of the firm.

a) While an income statement measures a company’s profits, profits are not the same as cash flows; profits are calculated on a cash basis rather than an accrual basis.

b) In measuring free cash flows we are more interested in considering cash flows from an accounting perspective rather than the perspective of the firm’s shareholders and investors.

c) Net cash flow does not include after-tax interest expense.

d) Free cash flow from an operating perspective must equal free cash flow from a financing perspective.

e) Positive operating free cash flows are equal to the cash flows distributed to the firm’s investors (both debt and equity).

f) FCF may be defined as net operating profit after taxes (NOPAT) minus the amount of net investment in operating working capital and fixed assets necessary to sustain the business.

Reference no: EM131448432

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