Question

Companies can use free cash flow to: Select one:

a. pay additional dividends.
b. acquire more property, plant, and equipment.
c. pay off debts.
d. All of the above.

Answer 1

Answer:

d.All of the above.

Explanation:

Free cash flow is the amount of cash that is available for management to use in any way they want (at their discretion), after all essential payments have been  made.

Essential payment may include taxation payment and other operational expenditure.

Keeping in view the above discussion, it can be assumed that the free cash flow can be used to pay additional dividends, acquire more property, plant and equipment and pay off debts.

Therefore the answer is d.All of the above.