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    Question

    Free Cash flow to the Equity can be calculated from Cash flow from Operations as ___________

    A Cash flow from Operations – Fixed Capital Investments (CAPEX) Correct Answer Incorrect Answer
    B Cash flow from Operations – Net Borrowings Correct Answer Incorrect Answer
    C Cash flow from Operations – Fixed Capital Investments + Net Borrowings Correct Answer Incorrect Answer
    D Cash flow from Operations – Fixed Capital Investments - Net Borrowings Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Free cash flow to the Equity can be calculated from Cash flow from Operations by subtracting out the fixed capital investments (which reduces the cash available to shareholders) and adding back the net borrowing (which makes the fund available to shareholders).

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