If net operating cash flow is 500 and capital expenditures are 600, what is Free Cash Flow?

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Multiple Choice

If net operating cash flow is 500 and capital expenditures are 600, what is Free Cash Flow?

Explanation:
Free Cash Flow shows how much cash a company has left after paying for capital investments. It equals operating cash flow minus capital expenditures. Here, 500 minus 600 equals −100. This negative result means the company spent more on fixed assets than it generated from operations in that period, indicating cash outflows exceed cash generated from core activities. Negative FCF can occur when a company is investing for growth and plans to fund those investments with future cash flows.

Free Cash Flow shows how much cash a company has left after paying for capital investments. It equals operating cash flow minus capital expenditures. Here, 500 minus 600 equals −100. This negative result means the company spent more on fixed assets than it generated from operations in that period, indicating cash outflows exceed cash generated from core activities. Negative FCF can occur when a company is investing for growth and plans to fund those investments with future cash flows.

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