Question

True or False
1a. When calculating a change, the later value is subtracted from the earlier value.
1b. Depreciation is not treated as an operating expense.
1c. Free cash flow is synonymous with cash flow from assets.

Answer 1

1.a )False

Reason

While calculating free cash flow depreciaiton is added to the net income inorder to reach free cash flow

1b)False

Reason

Depreciation is treated as operating expense and it is taken as operating expense inorder to calculate cash from operating activities

1c)True

Reason

Cash flow from assets is cash from operating activities deducted by net changes in working capital and capital expenditure of assets and free cash flows are also determined by deducting capital expenditure and networking capital from cash flow from operating activities.