Free cash flow to the firm (FCFF) is calculated as:

A Revenue minus expenses

B Operating income after taxes plus depreciation minus capital expenditures minus changes in working capital

C Net income only

D Dividends paid

✓ Correct Answer: Option B

FCFF = NOPAT + Depreciation - CapEx - ΔWorking Capital. Represents cash available to all capital providers (debt and equity holders). Used in DCF valuation.

💡 Why is B) the correct answer?

The correct answer to the question "Free cash flow to the firm (FCFF) is calculated as:" is Option B: Operating income after taxes plus depreciation minus capital expenditures minus changes in working capital.

The other options — A) Revenue minus expenses, C) Net income only, D) Dividends paid — are incorrect for this Pre-MBA Exam Prep question. As explained above: FCFF = NOPAT + Depreciation - CapEx - ΔWorking Capital. Represents cash available to all capital providers (debt and equity holders). Used in DCF valuation.

📚 About This Pre-MBA Exam Prep Practice Question

This 3-level Pre-MBA Exam Prep question from the Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

Practice Pre-MBA Exam Prep Quizzes → Browse All Questions Study Flashcards

Free cash flow to the firm (FCFF) is calculated as:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

Related Pre-MBA Exam Prep Questions