Question #36
Reading: Reading 21 Free Cash Flow Valuation
PDF File: Reading 21 Free Cash Flow Valuation.pdf
Page: 16
Status: Incorrect
Correct Answer: A
Your Answer: B
Question
Which of the following items is NOT subtracted from the net income to calculate free cash flow to equity (FCFE)?
Answer Choices:
A. Interest payments to bondholders
B. increase in accounts receivable
C. Increase in fixed assets
Explanation
Interest payments to bondholders are included in the income statement and are already
subtracted to calculate net income.