Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 5 - Balance Sheet and Statement of Cash Flows - Questions - Page 280: 28

Answer

The primary purpose of free cash flow is to determine the discretionary/unrestricted cash/flow a business entity has for acquiring additional investments, acquiring treasury stock, retiring debt, or even improving its liquidity.

Work Step by Step

Free cash flow is defined as the net cash produced by a business entity through its operations, excluding the cost of expenditures on assets.
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