📈 CFA Exam Prep

Free cash flow to the firm (FCFF) represents:

A Net income only
B Cash available to all capital providers (debt and equity holders) after operating and capital expenditures
C Revenue
D Only dividends

✓ Correct Answer: Option B

FCFF = EBIT(1−t) + Depreciation − CapEx − ΔWorking Capital. It represents cash available to all investors.

💡 Why is B) the correct answer?

The correct answer to the question "Free cash flow to the firm (FCFF) represents:" is Option B: Cash available to all capital providers (debt and equity holders) after operating and capital expenditures.

The other options — A) Net income only, C) Revenue, D) Only dividends — are incorrect for this CFA Exam Prep question. As explained above: FCFF = EBIT(1−t) + Depreciation − CapEx − ΔWorking Capital. It represents cash available to all investors.

📚 About This CFA Exam Prep Practice Question

This 3-level CFA Exam Prep question from the Financial Reporting & Analysis 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 CFA Exam Prep practice test or use flashcards for spaced repetition review.

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