alleryStart learning →How is free cash flow defined for judging dividend safety?
ANet profit less dividends
BOperating cash less capex
CSales less cost of goods
DAssets less total debt
Answer & Solution
Correct answer: B. Operating cash less capex
Free cash flow is operating cash flow minus capital expenditures.
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Related questions
Which limits can restrict how much a firm may distribute as dividend?Why might management avoid changing dividend policy abruptly?Which alternative to cash dividends may a firm choose when surplus cash exists?Which type of shareholder usually prefers earnings to be retained?With no NPV-positive projects and surplus cash, what should management do?Management knowing more than the market is called what?If dividends bear higher tax than gains, raising them does what to value?Per the Modigliani-Miller theorem, dividend policy has what effect on firm value?