Calculates how much cash a business generates after accounting for capital expenditures such as buildings or equipment. Can be used for expansion, dividends, or reducing debt.

• A. Net income
• B. Free Cash Flow
• C. Operating Cash Flow
• D. Working Capital

Answer: (B)

Free cash flow is the cash a business has after paying for capital investments like buildings or equipment. It shows the actual cash available for discretionary uses—expansion, dividends, or paying down debt—because it subtracts capital expenditures from cash generated by operations. Net income is an accrual-based profit that includes non-cash items and doesn’t reflect cash after investments. Operating cash flow measures cash from day-to-day operations but doesn’t account for the cash spent on long-term assets. Working capital is a snapshot of short-term liquidity, not cash remaining after investing in the asset base.